Correlation Between Catalent and SIGA Technologies

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

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

Diversification Opportunities for Catalent and SIGA Technologies

0.23

Correlation Coefficient

Catalent  SIGA Technologies

Modest diversification

The 3 months correlation between Catalent and SIGA is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and SIGA Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIGA Technologies 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 SIGA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIGA Technologies has no effect on the direction of Catalent i.e., Catalent and SIGA Technologies go up and down completely randomly.

Pair Corralation between Catalent and SIGA Technologies

Given the investment horizon of 90 days Catalent is expected to generate 0.16 times more return on investment than SIGA Technologies. However, Catalent is 6.45 times less risky than SIGA Technologies. It trades about 0.02 of its potential returns per unit of risk. SIGA Technologies is currently generating about 0.0 per unit of risk. If you would invest  6,070  in Catalent on September 2, 2024 and sell it today you would earn a total of  41.00  from holding Catalent or generate 0.68% return on investment over 90 days.

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

Catalent  vs.  SIGA Technologies

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

SIGA Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIGA Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, SIGA Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Catalent and SIGA Technologies

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

The idea behind Catalent and SIGA Technologies 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.