Correlation Between Catalent and CanSino Biologics
Can any of the company-specific risk be diversified away by investing in both Catalent and CanSino Biologics 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 Catalent and CanSino Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalent and CanSino Biologics, you can compare the effects of market volatilities on Catalent and CanSino Biologics 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 Catalent with a short position of CanSino Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and CanSino Biologics.
Diversification Opportunities for Catalent and CanSino Biologics
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Catalent and CanSino is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and CanSino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanSino Biologics and Catalent 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 Catalent are associated (or correlated) with CanSino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanSino Biologics has no effect on the direction of Catalent i.e., Catalent and CanSino Biologics go up and down completely randomly.
Pair Corralation between Catalent and CanSino Biologics
Given the investment horizon of 90 days Catalent is expected to under-perform the CanSino Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Catalent is 7.76 times less risky than CanSino Biologics. The stock trades about -0.07 of its potential returns per unit of risk. The CanSino Biologics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 206.00 in CanSino Biologics on January 25, 2024 and sell it today you would earn a total of 4.00 from holding CanSino Biologics or generate 1.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Catalent vs. CanSino Biologics
Performance |
Timeline |
Catalent |
CanSino Biologics |
Catalent and CanSino Biologics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Catalent and CanSino Biologics
The main advantage of trading using opposite Catalent and CanSino Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent position performs unexpectedly, CanSino Biologics 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 CanSino Biologics will offset losses from the drop in CanSino Biologics' long position.Catalent vs. Silver Spike Investment | Catalent vs. Alkermes Plc | Catalent vs. Eagle Pharmaceuticals | Catalent vs. Evotec SE ADR |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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