Correlation Between Roche Bobois and SA Catana

Can any of the company-specific risk be diversified away by investing in both Roche Bobois and SA Catana 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 Roche Bobois and SA Catana into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Roche Bobois and SA Catana Group, you can compare the effects of market volatilities on Roche Bobois and SA Catana 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 Roche Bobois with a short position of SA Catana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roche Bobois and SA Catana.

Diversification Opportunities for Roche Bobois and SA Catana

-0.08

Correlation Coefficient

Roche Bobois  SA Catana

Good diversification

The 3 months correlation between Roche and CATG is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Roche Bobois and SA Catana Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SA Catana Group and Roche Bobois 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 Roche Bobois are associated (or correlated) with SA Catana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SA Catana Group has no effect on the direction of Roche Bobois i.e., Roche Bobois and SA Catana go up and down completely randomly.

Pair Corralation between Roche Bobois and SA Catana

Assuming the 90 days trading horizon Roche Bobois is expected to under-perform the SA Catana. But the stock apears to be less risky and, when comparing its historical volatility, Roche Bobois is 1.55 times less risky than SA Catana. The stock trades about -0.19 of its potential returns per unit of risk. The SA Catana Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  495.00  in SA Catana Group on September 12, 2024 and sell it today you would earn a total of  0.00  from holding SA Catana Group or generate 0.0% return on investment over 90 days.

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

Roche Bobois  vs.  SA Catana Group

Roche Bobois

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roche Bobois has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SA Catana Group

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Roche Bobois and SA Catana

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

The idea behind Roche Bobois and SA Catana 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.