Correlation Between Catalent and Assertio Therapeutics

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

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

Diversification Opportunities for Catalent and Assertio Therapeutics

0.03

Correlation Coefficient

Catalent  Assertio Therapeutics

Significant diversification

The 3 months correlation between Catalent and Assertio is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Assertio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assertio Therapeutics 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 Assertio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assertio Therapeutics has no effect on the direction of Catalent i.e., Catalent and Assertio Therapeutics go up and down completely randomly.

Pair Corralation between Catalent and Assertio Therapeutics

Given the investment horizon of 90 days Catalent is expected to generate 0.14 times more return on investment than Assertio Therapeutics. However, Catalent is 7.13 times less risky than Assertio Therapeutics. It trades about 0.11 of its potential returns per unit of risk. Assertio Therapeutics is currently generating about -0.08 per unit of risk. If you would invest  5,969  in Catalent on September 12, 2024 and sell it today you would earn a total of  255.00  from holding Catalent or generate 4.27% return on investment over 90 days.

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

Catalent  vs.  Assertio Therapeutics

Catalent

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 8 (%) 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.

Assertio Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assertio Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Catalent and Assertio Therapeutics

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

The idea behind Catalent and Assertio Therapeutics 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.