Correlation Between Catalyst Pharmaceuticals and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Catalyst Pharmaceuticals and Fast Retailing 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 Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Pharmaceuticals and Fast Retailing Co, you can compare the effects of market volatilities on Catalyst Pharmaceuticals and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Pharmaceuticals and Fast Retailing.
Diversification Opportunities for Catalyst Pharmaceuticals and Fast Retailing
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Catalyst and Fast is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and Fast Retailing go up and down completely randomly.
Pair Corralation between Catalyst Pharmaceuticals and Fast Retailing
Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to generate 1.92 times more return on investment than Fast Retailing. However, Catalyst Pharmaceuticals is 1.92 times more volatile than Fast Retailing Co. It trades about -0.01 of its potential returns per unit of risk. Fast Retailing Co is currently generating about -0.21 per unit of risk. If you would invest 2,134 in Catalyst Pharmaceuticals on August 24, 2024 and sell it today you would lose (22.00) from holding Catalyst Pharmaceuticals or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Pharmaceuticals vs. Fast Retailing Co
Performance |
| Timeline |
| Catalyst Pharmaceuticals |
| Fast Retailing |
Catalyst Pharmaceuticals and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Pharmaceuticals and Fast Retailing
The main advantage of trading using opposite Catalyst Pharmaceuticals and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Pharmaceuticals position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| Catalyst Pharmaceuticals vs. Day One Biopharmaceuticals | Catalyst Pharmaceuticals vs. Terns Pharmaceuticals | Catalyst Pharmaceuticals vs. X4 Pharmaceuticals | Catalyst Pharmaceuticals vs. Inozyme Pharma |
| Fast Retailing vs. Industria de Diseno | Fast Retailing vs. Aritzia | Fast Retailing vs. Shoe Carnival | Fast Retailing vs. Genesco |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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