Correlation Between Hempstract and Catalent

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

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

Diversification Opportunities for Hempstract and Catalent

-0.46

Correlation Coefficient

Hempstract  Catalent

Very good diversification

The 3 months correlation between Hempstract and Catalent is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hempstract and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and Hempstract 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 Hempstract are associated (or correlated) with Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of Hempstract i.e., Hempstract and Catalent go up and down completely randomly.

Pair Corralation between Hempstract and Catalent

Given the investment horizon of 90 days Hempstract is expected to generate 28.96 times more return on investment than Catalent. However, Hempstract is 28.96 times more volatile than Catalent. It trades about 0.06 of its potential returns per unit of risk. Catalent is currently generating about -0.05 per unit of risk. If you would invest  0.30  in Hempstract on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Hempstract or generate 0.0% return on investment over 90 days.

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

Hempstract  vs.  Catalent

Hempstract

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hempstract are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Hempstract unveiled solid returns over the last few months and may actually be approaching a breakup point.

Catalent

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal essential indicators, Catalent may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Hempstract and Catalent

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

The idea behind Hempstract and Catalent 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 Stocks Directory module to find actively traded stocks across global markets.