Correlation Between Lucy Scientific and Catalent

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

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

Diversification Opportunities for Lucy Scientific and Catalent

0.0

Correlation Coefficient

Lucy Scientific  Catalent

Pay attention - limited upside

The 3 months correlation between Lucy and Catalent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lucy Scientific Discovery and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and Lucy Scientific 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 Lucy Scientific Discovery 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 Lucy Scientific i.e., Lucy Scientific and Catalent go up and down completely randomly.

Pair Corralation between Lucy Scientific and Catalent

If you would invest (100.00) in Catalent on November 28, 2024 and sell it today you would earn a total of  100.00  from holding Catalent 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

Lucy Scientific Discovery  vs.  Catalent

Lucy Scientific Discovery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lucy Scientific Discovery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Lucy Scientific is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

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.

Pair Trading with Lucy Scientific and Catalent

The main advantage of trading using opposite Lucy Scientific and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucy Scientific 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 Lucy Scientific Discovery 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.