Correlation Between Sovereign Metals and Catalyst Media

Can any of the company-specific risk be diversified away by investing in both Sovereign Metals and Catalyst Media 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 Sovereign Metals and Catalyst Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sovereign Metals and Catalyst Media Group, you can compare the effects of market volatilities on Sovereign Metals and Catalyst Media 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 Sovereign Metals with a short position of Catalyst Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sovereign Metals and Catalyst Media.

Diversification Opportunities for Sovereign Metals and Catalyst Media

-0.92

Correlation Coefficient

Sovereign Metals  Catalyst Media

Pay attention - limited upside

The 3 months correlation between Sovereign and Catalyst is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sovereign Metals and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group and Sovereign Metals 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 Sovereign Metals are associated (or correlated) with Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of Sovereign Metals i.e., Sovereign Metals and Catalyst Media go up and down completely randomly.

Pair Corralation between Sovereign Metals and Catalyst Media

Assuming the 90 days trading horizon Sovereign Metals is expected to generate 0.88 times more return on investment than Catalyst Media. However, Sovereign Metals is 1.14 times less risky than Catalyst Media. It trades about 0.15 of its potential returns per unit of risk. Catalyst Media Group is currently generating about -0.21 per unit of risk. If you would invest  3,600  in Sovereign Metals on December 25, 2024 and sell it today you would earn a total of  850.00  from holding Sovereign Metals or generate 23.61% return on investment over 90 days.

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

Sovereign Metals  vs.  Catalyst Media Group

Sovereign Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sovereign Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sovereign Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Catalyst Media Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catalyst Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Sovereign Metals and Catalyst Media

The main advantage of trading using opposite Sovereign Metals and Catalyst Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sovereign Metals position performs unexpectedly, Catalyst Media 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 Catalyst Media will offset losses from the drop in Catalyst Media's long position.

The idea behind Sovereign Metals and Catalyst Media Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.