Correlation Between INDIVIOR PLC and Catalent

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

By analyzing existing cross correlation between INDIVIOR PLC ADR and Catalent, you can compare the effects of market volatilities on INDIVIOR PLC and Catalent 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 INDIVIOR PLC with a short position of Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDIVIOR PLC and Catalent.

Diversification Opportunities for INDIVIOR PLC and Catalent

-0.48

Correlation Coefficient

INDIVIOR PLC  Catalent

Very good diversification

The 3 months correlation between INDIVIOR and Catalent is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding INDIVIOR PLC ADR and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and INDIVIOR PLC 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 INDIVIOR PLC ADR are associated (or correlated) with Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of INDIVIOR PLC i.e., INDIVIOR PLC and Catalent go up and down completely randomly.

Pair Corralation between INDIVIOR PLC and Catalent

Assuming the 90 days horizon INDIVIOR PLC ADR is expected to generate 2.26 times more return on investment than Catalent. However, INDIVIOR PLC is 2.26 times more volatile than Catalent. It trades about 0.03 of its potential returns per unit of risk. Catalent is currently generating about 0.04 per unit of risk. If you would invest  2,300  in INDIVIOR PLC ADR on September 2, 2024 and sell it today you would lose (115.00) from holding INDIVIOR PLC ADR or give up 5.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	25.2%
Values	Daily Returns

INDIVIOR PLC ADR  vs.  Catalent

INDIVIOR PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDIVIOR PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, INDIVIOR PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with INDIVIOR PLC and Catalent

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

The idea behind INDIVIOR PLC ADR and Catalent 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.