Correlation Between Micron Technology and Catalyst Pharmaceuticals

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Catalyst Pharmaceuticals 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 Micron Technology and Catalyst Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Catalyst Pharmaceuticals, you can compare the effects of market volatilities on Micron Technology and Catalyst Pharmaceuticals 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 Micron Technology with a short position of Catalyst Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Catalyst Pharmaceuticals.

Diversification Opportunities for Micron Technology and Catalyst Pharmaceuticals

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Micron and Catalyst is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Catalyst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Pharmaceuticals and Micron Technology 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 Micron Technology are associated (or correlated) with Catalyst Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Pharmaceuticals has no effect on the direction of Micron Technology i.e., Micron Technology and Catalyst Pharmaceuticals go up and down completely randomly.

Pair Corralation between Micron Technology and Catalyst Pharmaceuticals

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.29 times more return on investment than Catalyst Pharmaceuticals. However, Micron Technology is 1.29 times more volatile than Catalyst Pharmaceuticals. It trades about -0.02 of its potential returns per unit of risk. Catalyst Pharmaceuticals is currently generating about -0.06 per unit of risk. If you would invest  10,639  in Micron Technology on August 28, 2024 and sell it today you would lose (191.00) from holding Micron Technology or give up 1.8% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Micron Technology  vs.  Catalyst Pharmaceuticals

 Performance 
       Timeline  
Micron Technology 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.
Catalyst Pharmaceuticals 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Catalyst Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Micron Technology and Catalyst Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Micron Technology and Catalyst Pharmaceuticals

The main advantage of trading using opposite Micron Technology and Catalyst Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals will offset losses from the drop in Catalyst Pharmaceuticals' long position.
The idea behind Micron Technology and Catalyst Pharmaceuticals 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.
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

Other Complementary Tools

Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.