Correlation Between Catcha Investment and GSR II

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

By analyzing existing cross correlation between Catcha Investment Corp and GSR II Meteora, you can compare the effects of market volatilities on Catcha Investment and GSR II 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 Catcha Investment with a short position of GSR II. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catcha Investment and GSR II.

Diversification Opportunities for Catcha Investment and GSR II

0.46

Correlation Coefficient

Catcha Investment  GSR II

Very weak diversification

The 3 months correlation between Catcha and GSR is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Catcha Investment Corp and GSR II Meteora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSR II Meteora and Catcha Investment 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 Catcha Investment Corp are associated (or correlated) with GSR II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSR II Meteora has no effect on the direction of Catcha Investment i.e., Catcha Investment and GSR II go up and down completely randomly.

Pair Corralation between Catcha Investment and GSR II

Given the investment horizon of 90 days Catcha Investment Corp is expected to generate 0.9 times more return on investment than GSR II. However, Catcha Investment Corp is 1.11 times less risky than GSR II. It trades about 0.01 of its potential returns per unit of risk. GSR II Meteora is currently generating about -0.12 per unit of risk. If you would invest  1,005  in Catcha Investment Corp on September 2, 2024 and sell it today you would lose (115.00) from holding Catcha Investment Corp or give up 11.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	41.49%
Values	Daily Returns

Catcha Investment Corp  vs.  GSR II Meteora

Catcha Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catcha Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Catcha Investment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

GSR II Meteora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GSR II Meteora has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, GSR II is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Catcha Investment and GSR II

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

The idea behind Catcha Investment Corp and GSR II Meteora 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.