Correlation Between Tarena International and Catalent

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

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

Diversification Opportunities for Tarena International and Catalent

0.0

Correlation Coefficient

Tarena International  Catalent

Pay attention - limited upside

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

Pair Corralation between Tarena International and Catalent

If you would invest  68.00  in Tarena International on December 29, 2024 and sell it today you would lose (28.00) from holding Tarena International or give up 41.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Tarena International  vs.  Catalent

Tarena International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tarena International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Tarena International displayed solid returns over the last few months and may actually be approaching a breakup point.

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 Tarena International and Catalent

The main advantage of trading using opposite Tarena International and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tarena International 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 Tarena International 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.