Correlation Between CATLIN GROUP and Weiss Korea

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

By analyzing existing cross correlation between CATLIN GROUP and Weiss Korea Opportunity, you can compare the effects of market volatilities on CATLIN GROUP and Weiss Korea 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 CATLIN GROUP with a short position of Weiss Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Weiss Korea.

Diversification Opportunities for CATLIN GROUP and Weiss Korea

0.56

Correlation Coefficient

CATLIN GROUP  Weiss Korea

Very weak diversification

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

Pair Corralation between CATLIN GROUP and Weiss Korea

Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 1.21 times more return on investment than Weiss Korea. However, CATLIN GROUP is 1.21 times more volatile than Weiss Korea Opportunity. It trades about 0.05 of its potential returns per unit of risk. Weiss Korea Opportunity is currently generating about -0.01 per unit of risk. If you would invest  6,900  in CATLIN GROUP on September 13, 2024 and sell it today you would earn a total of  2,500  from holding CATLIN GROUP or generate 36.23% return on investment over 90 days.

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

CATLIN GROUP   vs.  Weiss Korea Opportunity

CATLIN GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CATLIN 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.

Weiss Korea Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weiss Korea Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Weiss Korea 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 CATLIN GROUP and Weiss Korea

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

The idea behind CATLIN GROUP and Weiss Korea Opportunity 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 CEOs Directory module to screen CEOs from public companies around the world.