Correlation Between Viscofan and Catenon SA

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

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

Diversification Opportunities for Viscofan and Catenon SA

0.36

Correlation Coefficient

Viscofan  Catenon SA

Weak diversification

The 3 months correlation between Viscofan and Catenon is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Viscofan and Catenon SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catenon SA and Viscofan 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 Viscofan are associated (or correlated) with Catenon SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catenon SA has no effect on the direction of Viscofan i.e., Viscofan and Catenon SA go up and down completely randomly.

Pair Corralation between Viscofan and Catenon SA

Assuming the 90 days trading horizon Viscofan is expected to generate 0.23 times more return on investment than Catenon SA. However, Viscofan is 4.28 times less risky than Catenon SA. It trades about -0.28 of its potential returns per unit of risk. Catenon SA is currently generating about -0.07 per unit of risk. If you would invest  6,070  in Viscofan on October 26, 2024 and sell it today you would lose (160.00) from holding Viscofan or give up 2.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Viscofan  vs.  Catenon SA

Viscofan

Risk-Adjusted Performance

0 of 100

Very Weak

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

Catenon SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catenon SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Viscofan and Catenon SA

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

The idea behind Viscofan and Catenon SA 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.