Correlation Between Catalyst Pharmaceuticals and Mars Acquisition

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

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

Diversification Opportunities for Catalyst Pharmaceuticals and Mars Acquisition

0.1

Correlation Coefficient

Catalyst Pharmaceuticals  Mars Acquisition

Average diversification

The 3 months correlation between Catalyst and Mars is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and Mars Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mars Acquisition Corp 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 Mars Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mars Acquisition Corp has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and Mars Acquisition go up and down completely randomly.

Pair Corralation between Catalyst Pharmaceuticals and Mars Acquisition

Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to generate 2.16 times less return on investment than Mars Acquisition. In addition to that, Catalyst Pharmaceuticals is 1.15 times more volatile than Mars Acquisition Corp. It trades about 0.05 of its total potential returns per unit of risk. Mars Acquisition Corp is currently generating about 0.14 per unit of volatility. If you would invest  36.00  in Mars Acquisition Corp on October 11, 2024 and sell it today you would earn a total of  2.00  from holding Mars Acquisition Corp or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.0%
Values	Daily Returns

Catalyst Pharmaceuticals  vs.  Mars Acquisition Corp

Catalyst Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Pharmaceuticals are ranked lower than 6 (%) 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.

Mars Acquisition Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mars Acquisition Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Mars Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalyst Pharmaceuticals and Mars Acquisition

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

The idea behind Catalyst Pharmaceuticals and Mars Acquisition Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.