Correlation Between Catalyst Pharmaceuticals and ImpediMed
Can any of the company-specific risk be diversified away by investing in both Catalyst Pharmaceuticals and ImpediMed 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 ImpediMed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Pharmaceuticals and ImpediMed Limited, you can compare the effects of market volatilities on Catalyst Pharmaceuticals and ImpediMed 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 ImpediMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Pharmaceuticals and ImpediMed.
Diversification Opportunities for Catalyst Pharmaceuticals and ImpediMed
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Catalyst and ImpediMed is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and ImpediMed Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImpediMed Limited 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 ImpediMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImpediMed Limited has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and ImpediMed go up and down completely randomly.
Pair Corralation between Catalyst Pharmaceuticals and ImpediMed
Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to under-perform the ImpediMed. But the stock apears to be less risky and, when comparing its historical volatility, Catalyst Pharmaceuticals is 8.71 times less risky than ImpediMed. The stock trades about -0.11 of its potential returns per unit of risk. The ImpediMed Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5.00 in ImpediMed Limited on September 12, 2024 and sell it today you would lose (0.79) from holding ImpediMed Limited or give up 15.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Catalyst Pharmaceuticals vs. ImpediMed Limited
Performance |
| Timeline |
| Catalyst Pharmaceuticals |
| ImpediMed Limited |
Catalyst Pharmaceuticals and ImpediMed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Pharmaceuticals and ImpediMed
The main advantage of trading using opposite Catalyst Pharmaceuticals and ImpediMed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Pharmaceuticals position performs unexpectedly, ImpediMed 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 ImpediMed will offset losses from the drop in ImpediMed's long position.| Catalyst Pharmaceuticals vs. Day One Biopharmaceuticals | Catalyst Pharmaceuticals vs. Terns Pharmaceuticals | Catalyst Pharmaceuticals vs. X4 Pharmaceuticals | Catalyst Pharmaceuticals vs. Inozyme Pharma |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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