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 |
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
Performance |
Timeline |
Software Circle plc |
Catalyst Media Group |
Software Circle and Catalyst Media Volatility Contrast
Predicted Return Density |
Returns |
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.Software Circle vs. Restore plc | Software Circle vs. Franchise Brands PLC | Software Circle vs. Knights Group Holdings | Software Circle vs. Mind Gym |
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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.
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