Correlation Between Catalent and Tarena International
Can any of the company-specific risk be diversified away by investing in both Catalent and Tarena International 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 Catalent and Tarena International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalent and Tarena International, you can compare the effects of market volatilities on Catalent and Tarena International 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 Catalent with a short position of Tarena International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and Tarena International.
Diversification Opportunities for Catalent and Tarena International
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Catalent and Tarena is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Tarena International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarena International and Catalent 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 Catalent are associated (or correlated) with Tarena International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarena International has no effect on the direction of Catalent i.e., Catalent and Tarena International go up and down completely randomly.
Pair Corralation between Catalent and Tarena International
Given the investment horizon of 90 days Catalent is expected to generate 0.44 times more return on investment than Tarena International. However, Catalent is 2.29 times less risky than Tarena International. It trades about 0.04 of its potential returns per unit of risk. Tarena International is currently generating about -0.02 per unit of risk. If you would invest 4,550 in Catalent on September 2, 2024 and sell it today you would earn a total of 1,561 from holding Catalent or generate 34.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalent vs. Tarena International
Performance |
| Timeline |
| Catalent |
| Tarena International |
Catalent and Tarena International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalent and Tarena International
The main advantage of trading using opposite Catalent and Tarena International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent position performs unexpectedly, Tarena International 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 Tarena International will offset losses from the drop in Tarena International's long position.| Catalent vs. Crinetics Pharmaceuticals | Catalent vs. Enanta Pharmaceuticals | Catalent vs. Amicus Therapeutics | Catalent vs. Connect Biopharma Holdings |
| Tarena International vs. Catalent | Tarena International vs. Marine Products | Tarena International vs. BRP Inc | Tarena International vs. Brunswick |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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