Correlation Between Catalent and Swedish Orphan
Can any of the company-specific risk be diversified away by investing in both Catalent and Swedish Orphan 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 Swedish Orphan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalent and Swedish Orphan Biovitrum, you can compare the effects of market volatilities on Catalent and Swedish Orphan 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 Swedish Orphan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and Swedish Orphan.
Diversification Opportunities for Catalent and Swedish Orphan
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Catalent and Swedish is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Swedish Orphan Biovitrum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedish Orphan Biovitrum 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 Swedish Orphan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedish Orphan Biovitrum has no effect on the direction of Catalent i.e., Catalent and Swedish Orphan go up and down completely randomly.
Pair Corralation between Catalent and Swedish Orphan
Assuming the 90 days horizon Catalent is expected to under-perform the Swedish Orphan. But the stock apears to be less risky and, when comparing its historical volatility, Catalent is 6.96 times less risky than Swedish Orphan. The stock trades about -0.5 of its potential returns per unit of risk. The Swedish Orphan Biovitrum is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,776 in Swedish Orphan Biovitrum on October 15, 2024 and sell it today you would lose (56.00) from holding Swedish Orphan Biovitrum or give up 2.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 25.0% |
| Values | Daily Returns |
Catalent vs. Swedish Orphan Biovitrum
Performance |
| Timeline |
| Catalent |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Swedish Orphan Biovitrum |
Catalent and Swedish Orphan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalent and Swedish Orphan
The main advantage of trading using opposite Catalent and Swedish Orphan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent position performs unexpectedly, Swedish Orphan 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 Swedish Orphan will offset losses from the drop in Swedish Orphan's long position.| Catalent vs. BURLINGTON STORES | Catalent vs. Ebro Foods SA | Catalent vs. RETAIL FOOD GROUP | Catalent vs. BJs Wholesale Club |
| Swedish Orphan vs. PURETECH HEALTH PLC | Swedish Orphan vs. SOGECLAIR SA INH | Swedish Orphan vs. EPSILON HEALTHCARE LTD | Swedish Orphan vs. DELTA AIR LINES |
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.
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