Correlation Between Catalyst Pharmaceuticals and Estrella Immunopharma

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Can any of the company-specific risk be diversified away by investing in both Catalyst Pharmaceuticals and Estrella Immunopharma 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 Catalyst Pharmaceuticals and Estrella Immunopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Pharmaceuticals and Estrella Immunopharma, you can compare the effects of market volatilities on Catalyst Pharmaceuticals and Estrella Immunopharma 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 Catalyst Pharmaceuticals with a short position of Estrella Immunopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Pharmaceuticals and Estrella Immunopharma.

Diversification Opportunities for Catalyst Pharmaceuticals and Estrella Immunopharma

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Catalyst and Estrella is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and Estrella Immunopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estrella Immunopharma and Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals are associated (or correlated) with Estrella Immunopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estrella Immunopharma has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and Estrella Immunopharma go up and down completely randomly.

Pair Corralation between Catalyst Pharmaceuticals and Estrella Immunopharma

Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to generate 1.57 times less return on investment than Estrella Immunopharma. But when comparing it to its historical volatility, Catalyst Pharmaceuticals is 3.26 times less risky than Estrella Immunopharma. It trades about 0.13 of its potential returns per unit of risk. Estrella Immunopharma is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  93.00  in Estrella Immunopharma on September 3, 2024 and sell it today you would earn a total of  23.00  from holding Estrella Immunopharma or generate 24.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Catalyst Pharmaceuticals  vs.  Estrella Immunopharma

 Performance 
       Timeline  
Catalyst Pharmaceuticals 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Pharmaceuticals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Catalyst Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.
Estrella Immunopharma 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Estrella Immunopharma are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady essential indicators, Estrella Immunopharma sustained solid returns over the last few months and may actually be approaching a breakup point.

Catalyst Pharmaceuticals and Estrella Immunopharma Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Catalyst Pharmaceuticals and Estrella Immunopharma

The main advantage of trading using opposite Catalyst Pharmaceuticals and Estrella Immunopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Pharmaceuticals position performs unexpectedly, Estrella Immunopharma 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 Estrella Immunopharma will offset losses from the drop in Estrella Immunopharma's long position.
The idea behind Catalyst Pharmaceuticals and Estrella Immunopharma 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.
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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