Correlation Between Bloomsbury Publishing and Catalyst Media

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

By analyzing existing cross correlation between Bloomsbury Publishing Plc and Catalyst Media Group, you can compare the effects of market volatilities on Bloomsbury Publishing and Catalyst 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 Bloomsbury Publishing with a short position of Catalyst Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomsbury Publishing and Catalyst Media.

Diversification Opportunities for Bloomsbury Publishing and Catalyst Media

0.31

Correlation Coefficient

Bloomsbury Publishing  Catalyst Media

Weak diversification

The 3 months correlation between Bloomsbury and Catalyst is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bloomsbury Publishing Plc and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group and Bloomsbury Publishing 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 Bloomsbury Publishing Plc are associated (or correlated) with Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of Bloomsbury Publishing i.e., Bloomsbury Publishing and Catalyst Media go up and down completely randomly.

Pair Corralation between Bloomsbury Publishing and Catalyst Media

Assuming the 90 days trading horizon Bloomsbury Publishing Plc is expected to generate 0.96 times more return on investment than Catalyst Media. However, Bloomsbury Publishing Plc is 1.04 times less risky than Catalyst Media. It trades about 0.1 of its potential returns per unit of risk. Catalyst Media Group is currently generating about -0.36 per unit of risk. If you would invest  66,000  in Bloomsbury Publishing Plc on September 27, 2024 and sell it today you would earn a total of  2,000  from holding Bloomsbury Publishing Plc or generate 3.03% return on investment over 90 days.

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

Bloomsbury Publishing Plc  vs.  Catalyst Media Group

Bloomsbury Publishing Plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bloomsbury Publishing Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Bloomsbury Publishing is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Catalyst Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental 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 Bloomsbury Publishing and Catalyst Media

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

The idea behind Bloomsbury Publishing Plc and Catalyst Media 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.