Correlation Between Catalent and Eisai Co
Can any of the company-specific risk be diversified away by investing in both Catalent and Eisai Co 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 Eisai Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalent and Eisai Co, you can compare the effects of market volatilities on Catalent and Eisai Co 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 Eisai Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and Eisai Co.
Diversification Opportunities for Catalent and Eisai Co
Excellent diversification
The 3 months correlation between Catalent and Eisai is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai Co 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 Eisai Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eisai Co has no effect on the direction of Catalent i.e., Catalent and Eisai Co go up and down completely randomly.
Pair Corralation between Catalent and Eisai Co
Assuming the 90 days horizon Catalent is expected to generate 0.27 times more return on investment than Eisai Co. However, Catalent is 3.68 times less risky than Eisai Co. It trades about 0.29 of its potential returns per unit of risk. Eisai Co is currently generating about 0.02 per unit of risk. If you would invest 5,344 in Catalent on September 3, 2024 and sell it today you would earn a total of 382.00 from holding Catalent or generate 7.15% 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. Eisai Co
Performance |
| Timeline |
| Catalent |
| Eisai Co |
Catalent and Eisai Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalent and Eisai Co
The main advantage of trading using opposite Catalent and Eisai Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent position performs unexpectedly, Eisai Co 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 Eisai Co will offset losses from the drop in Eisai Co's long position.The idea behind Catalent and Eisai Co 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.| Eisai Co vs. NorAm Drilling AS | Eisai Co vs. CompuGroup Medical SE | Eisai Co vs. 24SEVENOFFICE GROUP AB | Eisai Co vs. Beazer Homes USA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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