Correlation Between X4 Pharmaceuticals and Catalyst Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both X4 Pharmaceuticals and Catalyst Pharmaceuticals 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 X4 Pharmaceuticals and Catalyst Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between X4 Pharmaceuticals and Catalyst Pharmaceuticals, you can compare the effects of market volatilities on X4 Pharmaceuticals and Catalyst Pharmaceuticals 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 X4 Pharmaceuticals with a short position of Catalyst Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of X4 Pharmaceuticals and Catalyst Pharmaceuticals.

Diversification Opportunities for X4 Pharmaceuticals and Catalyst Pharmaceuticals

-0.44

Correlation Coefficient

X4 Pharmaceuticals  Catalyst Pharmaceuticals

Very good diversification

The 3 months correlation between XFOR and Catalyst is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding X4 Pharmaceuticals and Catalyst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Pharmaceuticals and X4 Pharmaceuticals 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 X4 Pharmaceuticals are associated (or correlated) with Catalyst Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Pharmaceuticals has no effect on the direction of X4 Pharmaceuticals i.e., X4 Pharmaceuticals and Catalyst Pharmaceuticals go up and down completely randomly.

Pair Corralation between X4 Pharmaceuticals and Catalyst Pharmaceuticals

Given the investment horizon of 90 days X4 Pharmaceuticals is expected to under-perform the Catalyst Pharmaceuticals. In addition to that, X4 Pharmaceuticals is 5.28 times more volatile than Catalyst Pharmaceuticals. It trades about -0.02 of its total potential returns per unit of risk. Catalyst Pharmaceuticals is currently generating about 0.12 per unit of volatility. If you would invest  1,974  in Catalyst Pharmaceuticals on September 3, 2024 and sell it today you would earn a total of  279.00  from holding Catalyst Pharmaceuticals or generate 14.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

X4 Pharmaceuticals  vs.  Catalyst Pharmaceuticals

X4 Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days X4 Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Catalyst Pharmaceuticals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Pharmaceuticals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Catalyst Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X4 Pharmaceuticals and Catalyst Pharmaceuticals

The main advantage of trading using opposite X4 Pharmaceuticals and Catalyst Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X4 Pharmaceuticals position performs unexpectedly, Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals will offset losses from the drop in Catalyst Pharmaceuticals' long position.

The idea behind X4 Pharmaceuticals and Catalyst Pharmaceuticals 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.