Correlation Between Catalent and Sumitomo Dainippon

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

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

Diversification Opportunities for Catalent and Sumitomo Dainippon

0.0

Correlation Coefficient

Catalent  Sumitomo Dainippon

Pay attention - limited upside

The 3 months correlation between Catalent and Sumitomo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Sumitomo Dainippon Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Dainippon Pharma 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 Sumitomo Dainippon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Dainippon Pharma has no effect on the direction of Catalent i.e., Catalent and Sumitomo Dainippon go up and down completely randomly.

Pair Corralation between Catalent and Sumitomo Dainippon

If you would invest (100.00) in Sumitomo Dainippon Pharma on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Sumitomo Dainippon Pharma or generate -100.0% return on investment over 90 days.

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

Catalent  vs.  Sumitomo Dainippon Pharma

Catalent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catalent has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Sumitomo Dainippon Pharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sumitomo Dainippon Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sumitomo Dainippon is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Catalent and Sumitomo Dainippon

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

The idea behind Catalent and Sumitomo Dainippon Pharma 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.