Correlation Between Catalent and Organogenesis Holdings

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

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

Diversification Opportunities for Catalent and Organogenesis Holdings

-0.31

Correlation Coefficient

Catalent  Organogenesis Holdings

Very good diversification

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

Pair Corralation between Catalent and Organogenesis Holdings

Given the investment horizon of 90 days Catalent is expected to generate 2.67 times less return on investment than Organogenesis Holdings. But when comparing it to its historical volatility, Catalent is 7.35 times less risky than Organogenesis Holdings. It trades about 0.26 of its potential returns per unit of risk. Organogenesis Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  280.00  in Organogenesis Holdings on October 25, 2024 and sell it today you would earn a total of  70.00  from holding Organogenesis Holdings or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	64.41%
Values	Daily Returns

Catalent  vs.  Organogenesis Holdings

Catalent

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Catalent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively abnormal essential indicators, Catalent may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Organogenesis Holdings

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Organogenesis Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Organogenesis Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalent and Organogenesis Holdings

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

The idea behind Catalent and Organogenesis Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.