Correlation Between 3I Group and Catalyst Media

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

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

Diversification Opportunities for 3I Group and Catalyst Media

-0.28

Correlation Coefficient

3I Group  Catalyst Media

Very good diversification

The 3 months correlation between III and Catalyst is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding 3I Group 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 3I 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 3I Group 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 3I Group i.e., 3I Group and Catalyst Media go up and down completely randomly.

Pair Corralation between 3I Group and Catalyst Media

Assuming the 90 days trading horizon 3I Group PLC is expected to generate 0.81 times more return on investment than Catalyst Media. However, 3I Group PLC is 1.24 times less risky than Catalyst Media. It trades about 0.08 of its potential returns per unit of risk. Catalyst Media Group is currently generating about -0.01 per unit of risk. 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	98.46%
Values	Daily Returns

3I Group PLC  vs.  Catalyst Media Group

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.

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.

Pair Trading with 3I Group and Catalyst Media

The main advantage of trading using opposite 3I Group and Catalyst Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3I Group 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 3I Group 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .