Correlation Between Catalyst Media and Tata Steel

Can any of the company-specific risk be diversified away by investing in both Catalyst Media and Tata Steel 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 Tata Steel 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 Tata Steel Limited, you can compare the effects of market volatilities on Catalyst Media and Tata Steel 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 Tata Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and Tata Steel.

Diversification Opportunities for Catalyst Media and Tata Steel

0.61

Correlation Coefficient

Catalyst Media  Tata Steel

Poor diversification

The 3 months correlation between Catalyst and Tata is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Tata Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tata Steel Limited 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 Tata Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tata Steel Limited has no effect on the direction of Catalyst Media i.e., Catalyst Media and Tata Steel go up and down completely randomly.

Pair Corralation between Catalyst Media and Tata Steel

Assuming the 90 days trading horizon Catalyst Media is expected to generate 1.01 times less return on investment than Tata Steel. In addition to that, Catalyst Media is 1.02 times more volatile than Tata Steel Limited. It trades about 0.12 of its total potential returns per unit of risk. Tata Steel Limited is currently generating about 0.12 per unit of volatility. If you would invest  1,563  in Tata Steel Limited on April 22, 2025 and sell it today you would earn a total of  332.00  from holding Tata Steel Limited or generate 21.24% return on investment over 90 days.

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

Catalyst Media Group  vs.  Tata Steel Limited

Catalyst Media Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Media Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Catalyst Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tata Steel Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tata Steel Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Tata Steel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalyst Media and Tata Steel

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

The idea behind Catalyst Media Group and Tata Steel Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.