Correlation Between Teva Pharma and Catalent

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

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

Diversification Opportunities for Teva Pharma and Catalent

0.0

Correlation Coefficient

Teva Pharma  Catalent

Pay attention - limited upside

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

Pair Corralation between Teva Pharma and Catalent

If you would invest (100.00) in Catalent on December 29, 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	0.0%
Values	Daily Returns

Teva Pharma Industries  vs.  Catalent

Teva Pharma Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teva Pharma Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 Teva Pharma and Catalent

The main advantage of trading using opposite Teva Pharma and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teva Pharma 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 Teva Pharma Industries 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.