Correlation Between Ipsen SA and Catalent
Can any of the company-specific risk be diversified away by investing in both Ipsen SA and Catalent 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 Ipsen SA and Catalent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ipsen SA and Catalent, you can compare the effects of market volatilities on Ipsen SA and Catalent 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 Ipsen SA with a short position of Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ipsen SA and Catalent.
Diversification Opportunities for Ipsen SA and Catalent
Excellent diversification
The 3 months correlation between Ipsen and Catalent is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ipsen SA and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and Ipsen SA 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 Ipsen SA are associated (or correlated) with Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of Ipsen SA i.e., Ipsen SA and Catalent go up and down completely randomly.
Pair Corralation between Ipsen SA and Catalent
Assuming the 90 days horizon Ipsen SA is expected to generate 3.69 times less return on investment than Catalent. But when comparing it to its historical volatility, Ipsen SA is 2.14 times less risky than Catalent. It trades about 0.02 of its potential returns per unit of risk. Catalent is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,334 in Catalent on September 26, 2024 and sell it today you would earn a total of 1,659 from holding Catalent or generate 38.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.41% |
| Values | Daily Returns |
Ipsen SA vs. Catalent
Performance |
| Timeline |
| Ipsen SA |
| Catalent |
Ipsen SA and Catalent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ipsen SA and Catalent
The main advantage of trading using opposite Ipsen SA and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ipsen SA position performs unexpectedly, Catalent 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 Catalent will offset losses from the drop in Catalent's long position.The idea behind Ipsen SA and Catalent 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.| Catalent vs. Zoetis Inc | Catalent vs. Takeda Pharmaceutical | Catalent vs. Eisai Co | Catalent vs. Teva Pharmaceutical Industries |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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