Correlation Between Catena Media and Centaur Media

Can any of the company-specific risk be diversified away by investing in both Catena Media and Centaur 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 Catena Media and Centaur Media 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 Centaur Media, you can compare the effects of market volatilities on Catena Media and Centaur 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 Catena Media with a short position of Centaur Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and Centaur Media.

Diversification Opportunities for Catena Media and Centaur Media

0.8

Correlation Coefficient

Catena Media  Centaur Media

Very poor diversification

The 3 months correlation between Catena and Centaur is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media PLC and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of Catena Media i.e., Catena Media and Centaur Media go up and down completely randomly.

Pair Corralation between Catena Media and Centaur Media

Assuming the 90 days trading horizon Catena Media PLC is expected to under-perform the Centaur Media. In addition to that, Catena Media is 1.37 times more volatile than Centaur Media. It trades about -0.21 of its total potential returns per unit of risk. Centaur Media is currently generating about -0.16 per unit of volatility. If you would invest  3,039  in Centaur Media on September 10, 2024 and sell it today you would lose (839.00) from holding Centaur Media or give up 27.61% of portfolio value over 90 days.

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

Catena Media PLC  vs.  Centaur Media

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Centaur Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centaur Media 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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Catena Media and Centaur Media

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

The idea behind Catena Media PLC and Centaur Media 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.