Correlation Between Cairn Homes and CATCo Reinsurance

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Can any of the company-specific risk be diversified away by investing in both Cairn Homes and CATCo Reinsurance 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 Cairn Homes and CATCo Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and CATCo Reinsurance Opps, you can compare the effects of market volatilities on Cairn Homes and CATCo Reinsurance 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 Cairn Homes with a short position of CATCo Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and CATCo Reinsurance.

Diversification Opportunities for Cairn Homes and CATCo Reinsurance

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Cairn and CATCo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and CATCo Reinsurance Opps in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATCo Reinsurance Opps and Cairn Homes 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 Cairn Homes PLC are associated (or correlated) with CATCo Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CATCo Reinsurance Opps has no effect on the direction of Cairn Homes i.e., Cairn Homes and CATCo Reinsurance go up and down completely randomly.

Pair Corralation between Cairn Homes and CATCo Reinsurance

If you would invest  15,460  in Cairn Homes PLC on September 18, 2024 and sell it today you would earn a total of  3,780  from holding Cairn Homes PLC or generate 24.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cairn Homes PLC  vs.  CATCo Reinsurance Opps

 Performance 
       Timeline  
Cairn Homes PLC 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Cairn Homes PLC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Cairn Homes exhibited solid returns over the last few months and may actually be approaching a breakup point.
CATCo Reinsurance Opps 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CATCo Reinsurance Opps has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CATCo Reinsurance is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Cairn Homes and CATCo Reinsurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cairn Homes and CATCo Reinsurance

The main advantage of trading using opposite Cairn Homes and CATCo Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes position performs unexpectedly, CATCo Reinsurance 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 CATCo Reinsurance will offset losses from the drop in CATCo Reinsurance's long position.
The idea behind Cairn Homes PLC and CATCo Reinsurance Opps 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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