Correlation Between Tradegate and Catalent

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

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

Diversification Opportunities for Tradegate and Catalent

-0.04

Correlation Coefficient

Tradegate  Catalent

Good diversification

The 3 months correlation between Tradegate and Catalent is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tradegate AG Wertpapierhandels and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and Tradegate 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 Tradegate AG Wertpapierhandelsbank 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 Tradegate i.e., Tradegate and Catalent go up and down completely randomly.

Pair Corralation between Tradegate and Catalent

Assuming the 90 days horizon Tradegate is expected to generate 8.98 times less return on investment than Catalent. But when comparing it to its historical volatility, Tradegate AG Wertpapierhandelsbank is 1.6 times less risky than Catalent. It trades about 0.08 of its potential returns per unit of risk. Catalent is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  5,855  in Catalent on October 11, 2024 and sell it today you would earn a total of  138.00  from holding Catalent or generate 2.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	44.44%
Values	Daily Returns

Tradegate AG Wertpapierhandels  vs.  Catalent

Tradegate AG Wertpap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Catalent

Risk-Adjusted Performance

0 of 100

Good

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

Pair Trading with Tradegate and Catalent

The main advantage of trading using opposite Tradegate and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradegate 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 Tradegate AG Wertpapierhandelsbank 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.