Correlation Between Catalyst Media and 3I Group

Can any of the company-specific risk be diversified away by investing in both Catalyst Media and 3I Group 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 Catalyst Media and 3I Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Catalyst Media Group and 3I Group PLC, you can compare the effects of market volatilities on Catalyst Media and 3I Group 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 Catalyst Media with a short position of 3I Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and 3I Group.

Diversification Opportunities for Catalyst Media and 3I Group

-0.28

Correlation Coefficient

Catalyst Media  3I Group

Very good diversification

The 3 months correlation between Catalyst and III is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and 3I Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3I Group PLC and Catalyst Media 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 Catalyst Media Group are associated (or correlated) with 3I Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3I Group PLC has no effect on the direction of Catalyst Media i.e., Catalyst Media and 3I Group go up and down completely randomly.

Pair Corralation between Catalyst Media and 3I Group

Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the 3I Group. In addition to that, Catalyst Media is 1.23 times more volatile than 3I Group PLC. It trades about -0.01 of its total potential returns per unit of risk. 3I Group PLC is currently generating about 0.08 per unit of volatility. If you would invest  331,326  in 3I Group PLC on September 21, 2024 and sell it today you would earn a total of  24,474  from holding 3I Group PLC or generate 7.39% return on investment over 90 days.

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

Catalyst Media Group  vs.  3I Group PLC

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 rather sound technical and fundamental indicators, Catalyst Media is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

3I Group PLC

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 3I Group PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, 3I Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Catalyst Media and 3I Group

The main advantage of trading using opposite Catalyst Media and 3I Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media position performs unexpectedly, 3I Group 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 3I Group will offset losses from the drop in 3I Group's long position.

The idea behind Catalyst Media Group and 3I Group PLC 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 Stocks Directory module to find actively traded stocks across global markets.