Correlation Between COFCO Joycome and Catalent

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

By analyzing existing cross correlation between COFCO Joycome Foods and Catalent, you can compare the effects of market volatilities on COFCO Joycome 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 COFCO Joycome with a short position of Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of COFCO Joycome and Catalent.

Diversification Opportunities for COFCO Joycome and Catalent

-0.2

Correlation Coefficient

COFCO Joycome  Catalent

Good diversification

The 3 months correlation between COFCO and Catalent is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding COFCO Joycome Foods and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and COFCO Joycome 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 COFCO Joycome Foods 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 COFCO Joycome i.e., COFCO Joycome and Catalent go up and down completely randomly.

Pair Corralation between COFCO Joycome and Catalent

Assuming the 90 days horizon COFCO Joycome is expected to generate 4.55 times less return on investment than Catalent. In addition to that, COFCO Joycome is 3.63 times more volatile than Catalent. It trades about 0.02 of its total potential returns per unit of risk. Catalent is currently generating about 0.3 per unit of volatility. If you would invest  5,383  in Catalent on October 1, 2024 and sell it today you would earn a total of  610.00  from holding Catalent or generate 11.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

COFCO Joycome Foods  vs.  Catalent

COFCO Joycome Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COFCO Joycome Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COFCO Joycome is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Catalent

Risk-Adjusted Performance

0 of 100

Solid

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 January 2025.

Pair Trading with COFCO Joycome and Catalent

The main advantage of trading using opposite COFCO Joycome and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COFCO Joycome 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 COFCO Joycome Foods 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.