Correlation Between Software Circle and Catalyst Media

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

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

Diversification Opportunities for Software Circle and Catalyst Media

0.37

Correlation Coefficient

Software Circle  Catalyst Media

Weak diversification

The 3 months correlation between Software and Catalyst is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Software Circle 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 Software Circle 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 Software Circle 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 Software Circle i.e., Software Circle and Catalyst Media go up and down completely randomly.

Pair Corralation between Software Circle and Catalyst Media

Assuming the 90 days trading horizon Software Circle is expected to generate 2.04 times less return on investment than Catalyst Media. But when comparing it to its historical volatility, Software Circle plc is 1.23 times less risky than Catalyst Media. It trades about 0.07 of its potential returns per unit of risk. Catalyst Media Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,750  in Catalyst Media Group on April 11, 2025 and sell it today you would earn a total of  1,000.00  from holding Catalyst Media Group or generate 21.05% return on investment over 90 days.

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

Software Circle plc  vs.  Catalyst Media Group

Software Circle plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Software Circle plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Software Circle may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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.

Pair Trading with Software Circle and Catalyst Media

The main advantage of trading using opposite Software Circle and Catalyst Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Circle 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 Software Circle 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.