Correlation Between Catalyst Pharmaceuticals and Chicago Atlantic

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

By analyzing existing cross correlation between Catalyst Pharmaceuticals and Chicago Atlantic BDC,, you can compare the effects of market volatilities on Catalyst Pharmaceuticals and Chicago Atlantic 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 Chicago Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Pharmaceuticals and Chicago Atlantic.

Diversification Opportunities for Catalyst Pharmaceuticals and Chicago Atlantic

-0.31

Correlation Coefficient

Catalyst Pharmaceuticals  Chicago Atlantic

Very good diversification

The 3 months correlation between Catalyst and Chicago is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and Chicago Atlantic BDC, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicago Atlantic BDC, 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 Chicago Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicago Atlantic BDC, has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and Chicago Atlantic go up and down completely randomly.

Pair Corralation between Catalyst Pharmaceuticals and Chicago Atlantic

Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to generate 1.42 times more return on investment than Chicago Atlantic. However, Catalyst Pharmaceuticals is 1.42 times more volatile than Chicago Atlantic BDC,. It trades about 0.04 of its potential returns per unit of risk. Chicago Atlantic BDC, is currently generating about 0.05 per unit of risk. If you would invest  1,580  in Catalyst Pharmaceuticals on October 24, 2024 and sell it today you would earn a total of  714.50  from holding Catalyst Pharmaceuticals or generate 45.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Catalyst Pharmaceuticals  vs.  Chicago Atlantic BDC,

Catalyst Pharmaceuticals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Catalyst Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Chicago Atlantic BDC,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chicago Atlantic BDC, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Catalyst Pharmaceuticals and Chicago Atlantic

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

The idea behind Catalyst Pharmaceuticals and Chicago Atlantic BDC, 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.