Correlation Between Catalent and ANI Pharmaceuticals

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

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

Diversification Opportunities for Catalent and ANI Pharmaceuticals

0.27

Correlation Coefficient

Catalent  ANI Pharmaceuticals

Modest diversification

The 3 months correlation between Catalent and ANI is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and ANI Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANI Pharmaceuticals 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 ANI Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANI Pharmaceuticals has no effect on the direction of Catalent i.e., Catalent and ANI Pharmaceuticals go up and down completely randomly.

Pair Corralation between Catalent and ANI Pharmaceuticals

Given the investment horizon of 90 days Catalent is expected to generate 0.25 times more return on investment than ANI Pharmaceuticals. However, Catalent is 3.97 times less risky than ANI Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. ANI Pharmaceuticals is currently generating about -0.04 per unit of risk. If you would invest  6,072  in Catalent on September 4, 2024 and sell it today you would earn a total of  39.00  from holding Catalent or generate 0.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Catalent  vs.  ANI Pharmaceuticals

Catalent

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ANI Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANI Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Catalent and ANI Pharmaceuticals

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

The idea behind Catalent and ANI Pharmaceuticals 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 Global Correlations module to find global opportunities by holding instruments from different markets.