Correlation Between Rockwood Realisation and CATCo Reinsurance

Can any of the company-specific risk be diversified away by investing in both Rockwood Realisation and CATCo Reinsurance at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Rockwood Realisation and CATCo Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rockwood Realisation PLC and CATCo Reinsurance Opportunities, you can compare the effects of market volatilities on Rockwood Realisation and CATCo Reinsurance and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Rockwood Realisation with a short position of CATCo Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwood Realisation and CATCo Reinsurance.

Diversification Opportunities for Rockwood Realisation and CATCo Reinsurance

-0.13

Correlation Coefficient

Rockwood Realisation  CATCo Reinsurance

Good diversification

The 3 months correlation between Rockwood and CATCo is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Rockwood Realisation PLC and CATCo Reinsurance Opportunitie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATCo Reinsurance and Rockwood Realisation is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Rockwood Realisation PLC are associated (or correlated) with CATCo Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CATCo Reinsurance has no effect on the direction of Rockwood Realisation i.e., Rockwood Realisation and CATCo Reinsurance go up and down completely randomly.

Pair Corralation between Rockwood Realisation and CATCo Reinsurance

If you would invest  25,900  in Rockwood Realisation PLC on September 15, 2024 and sell it today you would earn a total of  300.00  from holding Rockwood Realisation PLC or generate 1.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Rockwood Realisation PLC  vs.  CATCo Reinsurance Opportunitie

Rockwood Realisation PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rockwood Realisation PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Rockwood Realisation is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CATCo Reinsurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CATCo Reinsurance Opportunities are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, CATCo Reinsurance exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rockwood Realisation and CATCo Reinsurance

The main advantage of trading using opposite Rockwood Realisation and CATCo Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockwood Realisation position performs unexpectedly, CATCo Reinsurance can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CATCo Reinsurance will offset losses from the drop in CATCo Reinsurance's long position.

The idea behind Rockwood Realisation PLC and CATCo Reinsurance Opportunities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.