Correlation Between Voyageurs and SA Catana

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

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

Diversification Opportunities for Voyageurs and SA Catana

-0.02

Correlation Coefficient

Voyageurs  SA Catana

Good diversification

The 3 months correlation between Voyageurs and CATG is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Voyageurs du Monde and SA Catana Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SA Catana Group and Voyageurs 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 Voyageurs du Monde are associated (or correlated) with SA Catana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SA Catana Group has no effect on the direction of Voyageurs i.e., Voyageurs and SA Catana go up and down completely randomly.

Pair Corralation between Voyageurs and SA Catana

Assuming the 90 days trading horizon Voyageurs du Monde is expected to under-perform the SA Catana. But the stock apears to be less risky and, when comparing its historical volatility, Voyageurs du Monde is 1.23 times less risky than SA Catana. The stock trades about -0.03 of its potential returns per unit of risk. The SA Catana Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  483.00  in SA Catana Group on September 27, 2024 and sell it today you would earn a total of  5.00  from holding SA Catana Group or generate 1.04% return on investment over 90 days.

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

Voyageurs du Monde  vs.  SA Catana Group

Voyageurs du Monde

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voyageurs du Monde has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Voyageurs is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

SA Catana Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SA Catana Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SA Catana is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Voyageurs and SA Catana

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

The idea behind Voyageurs du Monde and SA Catana Group 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.