Correlation Between Catalyst Pharmaceuticals and Cue Biopharma

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

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

Diversification Opportunities for Catalyst Pharmaceuticals and Cue Biopharma

0.02

Correlation Coefficient

Catalyst Pharmaceuticals  Cue Biopharma

Significant diversification

The 3 months correlation between Catalyst and Cue is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and Cue Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cue Biopharma and Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals are associated (or correlated) with Cue Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cue Biopharma has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and Cue Biopharma go up and down completely randomly.

Pair Corralation between Catalyst Pharmaceuticals and Cue Biopharma

Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to generate 0.48 times more return on investment than Cue Biopharma. However, Catalyst Pharmaceuticals is 2.1 times less risky than Cue Biopharma. It trades about 0.1 of its potential returns per unit of risk. Cue Biopharma is currently generating about 0.01 per unit of risk. If you would invest  2,107  in Catalyst Pharmaceuticals on December 28, 2024 and sell it today you would earn a total of  408.00  from holding Catalyst Pharmaceuticals or generate 19.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Catalyst Pharmaceuticals  vs.  Cue Biopharma

Catalyst Pharmaceuticals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Pharmaceuticals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Catalyst Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Cue Biopharma

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cue Biopharma are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Cue Biopharma may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Catalyst Pharmaceuticals and Cue Biopharma

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

The idea behind Catalyst Pharmaceuticals and Cue Biopharma 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.