Correlation Between Catena AB and Photocat

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

By analyzing existing cross correlation between Catena AB and Photocat AS, you can compare the effects of market volatilities on Catena AB and Photocat 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 Catena AB with a short position of Photocat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena AB and Photocat.

Diversification Opportunities for Catena AB and Photocat

0.71

Correlation Coefficient

Catena AB  Photocat

Poor diversification

The 3 months correlation between Catena and Photocat is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Catena AB and Photocat AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photocat AS and Catena AB 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 Catena AB are associated (or correlated) with Photocat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photocat AS has no effect on the direction of Catena AB i.e., Catena AB and Photocat go up and down completely randomly.

Pair Corralation between Catena AB and Photocat

Assuming the 90 days trading horizon Catena AB is expected to generate 1.68 times less return on investment than Photocat. But when comparing it to its historical volatility, Catena AB is 1.13 times less risky than Photocat. It trades about 0.09 of its potential returns per unit of risk. Photocat AS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  850.00  in Photocat AS on April 24, 2025 and sell it today you would earn a total of  95.00  from holding Photocat AS or generate 11.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Catena AB  vs.  Photocat AS

Catena AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Catena AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Catena AB may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Photocat AS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Photocat AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Photocat may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Catena AB and Photocat

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

The idea behind Catena AB and Photocat AS 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.