Correlation Between Catalyst Pharmaceuticals and Silence Therapeutics
Can any of the company-specific risk be diversified away by investing in both Catalyst Pharmaceuticals and Silence Therapeutics 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 Silence Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Pharmaceuticals and Silence Therapeutics PLC, you can compare the effects of market volatilities on Catalyst Pharmaceuticals and Silence Therapeutics 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 Silence Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Pharmaceuticals and Silence Therapeutics.
Diversification Opportunities for Catalyst Pharmaceuticals and Silence Therapeutics
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Catalyst and Silence is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and Silence Therapeutics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silence Therapeutics PLC 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 Silence Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silence Therapeutics PLC has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and Silence Therapeutics go up and down completely randomly.
Pair Corralation between Catalyst Pharmaceuticals and Silence Therapeutics
Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to generate 1.03 times less return on investment than Silence Therapeutics. But when comparing it to its historical volatility, Catalyst Pharmaceuticals is 1.87 times less risky than Silence Therapeutics. It trades about 0.08 of its potential returns per unit of risk. Silence Therapeutics PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 580.00 in Silence Therapeutics PLC on August 31, 2024 and sell it today you would earn a total of 212.00 from holding Silence Therapeutics PLC or generate 36.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Pharmaceuticals vs. Silence Therapeutics PLC
Performance |
| Timeline |
| Catalyst Pharmaceuticals |
| Silence Therapeutics PLC |
Catalyst Pharmaceuticals and Silence Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Pharmaceuticals and Silence Therapeutics
The main advantage of trading using opposite Catalyst Pharmaceuticals and Silence Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Pharmaceuticals position performs unexpectedly, Silence Therapeutics 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 Silence Therapeutics will offset losses from the drop in Silence Therapeutics' long position.| Catalyst Pharmaceuticals vs. Cue Biopharma | Catalyst Pharmaceuticals vs. Eliem Therapeutics | Catalyst Pharmaceuticals vs. Inhibrx | Catalyst Pharmaceuticals vs. Molecular Partners AG |
| Silence Therapeutics vs. Cue Biopharma | Silence Therapeutics vs. Eliem Therapeutics | Silence Therapeutics vs. Inhibrx | Silence Therapeutics vs. Molecular Partners AG |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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