Correlation Between TMT Investments and Catalyst Media
Can any of the company-specific risk be diversified away by investing in both TMT Investments 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 TMT Investments and Catalyst Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMT Investments PLC and Catalyst Media Group, you can compare the effects of market volatilities on TMT Investments 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 TMT Investments with a short position of Catalyst Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMT Investments and Catalyst Media.
Diversification Opportunities for TMT Investments and Catalyst Media
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TMT and Catalyst is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding TMT Investments PLC 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 TMT Investments 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 TMT Investments PLC 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 TMT Investments i.e., TMT Investments and Catalyst Media go up and down completely randomly.
Pair Corralation between TMT Investments and Catalyst Media
Assuming the 90 days trading horizon TMT Investments PLC is expected to generate 0.55 times more return on investment than Catalyst Media. However, TMT Investments PLC is 1.82 times less risky than Catalyst Media. It trades about -0.05 of its potential returns per unit of risk. Catalyst Media Group is currently generating about -0.18 per unit of risk. If you would invest 293.00 in TMT Investments PLC on December 3, 2024 and sell it today you would lose (14.00) from holding TMT Investments PLC or give up 4.78% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
TMT Investments PLC vs. Catalyst Media Group
Performance |
Timeline |
TMT Investments PLC |
Catalyst Media Group |
TMT Investments and Catalyst Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TMT Investments and Catalyst Media
The main advantage of trading using opposite TMT Investments and Catalyst Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMT Investments 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.TMT Investments vs. Vitec Software Group | TMT Investments vs. Software Circle plc | TMT Investments vs. Edita Food Industries | TMT Investments vs. Sligro Food Group |
Catalyst Media vs. LPKF Laser Electronics | Catalyst Media vs. Associated British Foods | Catalyst Media vs. Chrysalis Investments | Catalyst Media vs. OneSavings Bank PLC |
Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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