Correlation Between Catena Media and G5 Entertainment

Can any of the company-specific risk be diversified away by investing in both Catena Media and G5 Entertainment 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 Catena Media and G5 Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Catena Media PLC and G5 Entertainment AB, you can compare the effects of market volatilities on Catena Media and G5 Entertainment 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 Catena Media with a short position of G5 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and G5 Entertainment.

Diversification Opportunities for Catena Media and G5 Entertainment

-0.61

Correlation Coefficient

Catena Media  G5 Entertainment

Excellent diversification

The 3 months correlation between Catena and 0QUS is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media PLC and G5 Entertainment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G5 Entertainment and Catena Media 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 Catena Media PLC are associated (or correlated) with G5 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G5 Entertainment has no effect on the direction of Catena Media i.e., Catena Media and G5 Entertainment go up and down completely randomly.

Pair Corralation between Catena Media and G5 Entertainment

Assuming the 90 days trading horizon Catena Media PLC is expected to under-perform the G5 Entertainment. In addition to that, Catena Media is 1.86 times more volatile than G5 Entertainment AB. It trades about -0.21 of its total potential returns per unit of risk. G5 Entertainment AB is currently generating about 0.02 per unit of volatility. If you would invest  9,600  in G5 Entertainment AB on August 30, 2024 and sell it today you would earn a total of  150.00  from holding G5 Entertainment AB or generate 1.56% return on investment over 90 days.

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

Catena Media PLC  vs.  G5 Entertainment AB

Catena Media PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catena Media PLC 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 basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

G5 Entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in G5 Entertainment AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, G5 Entertainment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Catena Media and G5 Entertainment

The main advantage of trading using opposite Catena Media and G5 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, G5 Entertainment 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 G5 Entertainment will offset losses from the drop in G5 Entertainment's long position.

The idea behind Catena Media PLC and G5 Entertainment AB 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.