Correlation Between Analog Devices and Catalyst Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Catalyst Pharmaceuticals 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 Analog Devices and Catalyst Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Catalyst Pharmaceuticals, you can compare the effects of market volatilities on Analog Devices and Catalyst Pharmaceuticals 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 Analog Devices with a short position of Catalyst Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Catalyst Pharmaceuticals.
Diversification Opportunities for Analog Devices and Catalyst Pharmaceuticals
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Analog and Catalyst is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Catalyst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Pharmaceuticals and Analog Devices 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 Analog Devices are associated (or correlated) with Catalyst Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Pharmaceuticals has no effect on the direction of Analog Devices i.e., Analog Devices and Catalyst Pharmaceuticals go up and down completely randomly.
Pair Corralation between Analog Devices and Catalyst Pharmaceuticals
Considering the 90-day investment horizon Analog Devices is expected to generate 0.95 times more return on investment than Catalyst Pharmaceuticals. However, Analog Devices is 1.05 times less risky than Catalyst Pharmaceuticals. It trades about -0.05 of its potential returns per unit of risk. Catalyst Pharmaceuticals is currently generating about -0.06 per unit of risk. If you would invest 23,014 in Analog Devices on August 28, 2024 and sell it today you would lose (656.00) from holding Analog Devices or give up 2.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Catalyst Pharmaceuticals
Performance |
| Timeline |
| Analog Devices |
| Catalyst Pharmaceuticals |
Analog Devices and Catalyst Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Catalyst Pharmaceuticals
The main advantage of trading using opposite Analog Devices and Catalyst Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals will offset losses from the drop in Catalyst Pharmaceuticals' long position.The idea behind Analog Devices and Catalyst Pharmaceuticals 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.| Catalyst Pharmaceuticals vs. Eliem Therapeutics | Catalyst Pharmaceuticals vs. HCW Biologics | Catalyst Pharmaceuticals vs. Scpharmaceuticals | Catalyst Pharmaceuticals vs. Milestone Pharmaceuticals |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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