Correlation Between Catalent and NTT DATA

Can any of the company-specific risk be diversified away by investing in both Catalent and NTT DATA 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 NTT DATA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Catalent and NTT DATA , you can compare the effects of market volatilities on Catalent and NTT DATA 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 NTT DATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and NTT DATA.

Diversification Opportunities for Catalent and NTT DATA

0.73

Correlation Coefficient

Catalent  NTT DATA

Poor diversification

The 3 months correlation between Catalent and NTT is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and NTT DATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTT DATA 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 NTT DATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTT DATA has no effect on the direction of Catalent i.e., Catalent and NTT DATA go up and down completely randomly.

Pair Corralation between Catalent and NTT DATA

Assuming the 90 days horizon Catalent is expected to generate 0.58 times more return on investment than NTT DATA. However, Catalent is 1.72 times less risky than NTT DATA. It trades about 0.28 of its potential returns per unit of risk. NTT DATA is currently generating about -0.01 per unit of risk. If you would invest  5,816  in Catalent on October 4, 2024 and sell it today you would earn a total of  177.00  from holding Catalent or generate 3.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	68.42%
Values	Daily Returns

Catalent  vs.  NTT DATA

Catalent

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Catalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Catalent may actually be approaching a critical reversion point that can send shares even higher in February 2025.

NTT DATA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NTT DATA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NTT DATA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalent and NTT DATA

The main advantage of trading using opposite Catalent and NTT DATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent position performs unexpectedly, NTT DATA 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 NTT DATA will offset losses from the drop in NTT DATA's long position.

The idea behind Catalent and NTT DATA 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.