Correlation Between Catcher Technology and Evergreen Steel

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

By analyzing existing cross correlation between Catcher Technology Co and Evergreen Steel Corp, you can compare the effects of market volatilities on Catcher Technology and Evergreen Steel 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 Catcher Technology with a short position of Evergreen Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catcher Technology and Evergreen Steel.

Diversification Opportunities for Catcher Technology and Evergreen Steel

0.56

Correlation Coefficient

Catcher Technology  Evergreen Steel

Very weak diversification

The 3 months correlation between Catcher and Evergreen is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Catcher Technology Co and Evergreen Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen Steel Corp and Catcher Technology 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 Catcher Technology Co are associated (or correlated) with Evergreen Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen Steel Corp has no effect on the direction of Catcher Technology i.e., Catcher Technology and Evergreen Steel go up and down completely randomly.

Pair Corralation between Catcher Technology and Evergreen Steel

Assuming the 90 days trading horizon Catcher Technology Co is expected to generate 1.02 times more return on investment than Evergreen Steel. However, Catcher Technology is 1.02 times more volatile than Evergreen Steel Corp. It trades about -0.16 of its potential returns per unit of risk. Evergreen Steel Corp is currently generating about -0.22 per unit of risk. If you would invest  23,500  in Catcher Technology Co on September 3, 2024 and sell it today you would lose (3,850) from holding Catcher Technology Co or give up 16.38% of portfolio value over 90 days.

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

Catcher Technology Co  vs.  Evergreen Steel Corp

Catcher Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catcher Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Evergreen Steel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evergreen Steel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Catcher Technology and Evergreen Steel

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

The idea behind Catcher Technology Co and Evergreen Steel Corp 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.