Correlation Between Catalyst Media and BH Macro

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

Diversification Opportunities for Catalyst Media and BH Macro

-0.02

Correlation Coefficient

Catalyst Media  BH Macro

Good diversification

The 3 months correlation between Catalyst and BHMU is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and BH Macro Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Macro 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 BH Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Macro Limited has no effect on the direction of Catalyst Media i.e., Catalyst Media and BH Macro go up and down completely randomly.

Pair Corralation between Catalyst Media and BH Macro

Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the BH Macro. In addition to that, Catalyst Media is 2.16 times more volatile than BH Macro Limited. It trades about -0.25 of its total potential returns per unit of risk. BH Macro Limited is currently generating about -0.03 per unit of volatility. If you would invest  372.00  in BH Macro Limited on February 21, 2024 and sell it today you would lose (7.00) from holding BH Macro Limited or give up 1.88% of portfolio value over 90 days.

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

Catalyst Media Group  vs.  BH Macro Limited

Catalyst Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

BH Macro Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BH Macro Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BH Macro is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Catalyst Media and BH Macro

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

The idea behind Catalyst Media Group and BH Macro 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.