Correlation Between Catalyst Biosciences and Benitec Biopharma

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

By analyzing existing cross correlation between Catalyst Biosciences and Benitec Biopharma Ltd, you can compare the effects of market volatilities on Catalyst Biosciences and Benitec Biopharma 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 Biosciences with a short position of Benitec Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Biosciences and Benitec Biopharma.

Diversification Opportunities for Catalyst Biosciences and Benitec Biopharma

0.35

Correlation Coefficient

Catalyst Biosciences  Benitec Biopharma

Weak diversification

The 3 months correlation between Catalyst and Benitec is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Biosciences and Benitec Biopharma Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benitec Biopharma and Catalyst Biosciences 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 Biosciences are associated (or correlated) with Benitec Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benitec Biopharma has no effect on the direction of Catalyst Biosciences i.e., Catalyst Biosciences and Benitec Biopharma go up and down completely randomly.

Pair Corralation between Catalyst Biosciences and Benitec Biopharma

If you would invest  521.00  in Benitec Biopharma Ltd on February 5, 2024 and sell it today you would earn a total of  374.00  from holding Benitec Biopharma Ltd or generate 71.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	2.33%
Values	Daily Returns

Catalyst Biosciences  vs.  Benitec Biopharma Ltd

Catalyst Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Catalyst Biosciences is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Benitec Biopharma

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Benitec Biopharma Ltd are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Benitec Biopharma exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalyst Biosciences and Benitec Biopharma

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

The idea behind Catalyst Biosciences and Benitec Biopharma Ltd 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.