Correlation Between Catalyst Biosciences and Acasti Pharma

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

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

Diversification Opportunities for Catalyst Biosciences and Acasti Pharma

0.91

Correlation Coefficient

Catalyst Biosciences  Acasti Pharma

Almost no diversification

The 3 months correlation between Catalyst and Acasti is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Biosciences and Acasti Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acasti Pharma and Catalyst Biosciences 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 Catalyst Biosciences are associated (or correlated) with Acasti Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acasti Pharma has no effect on the direction of Catalyst Biosciences i.e., Catalyst Biosciences and Acasti Pharma go up and down completely randomly.

Pair Corralation between Catalyst Biosciences and Acasti Pharma

Given the investment horizon of 90 days Catalyst Biosciences is expected to generate 1.37 times more return on investment than Acasti Pharma. However, Catalyst Biosciences is 1.37 times more volatile than Acasti Pharma. It trades about 0.06 of its potential returns per unit of risk. Acasti Pharma is currently generating about 0.03 per unit of risk. If you would invest  33.00  in Catalyst Biosciences on September 20, 2024 and sell it today you would earn a total of  8.00  from holding Catalyst Biosciences or generate 24.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	30.72%
Values	Daily Returns

Catalyst Biosciences  vs.  Acasti Pharma

Catalyst Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Catalyst Biosciences is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Acasti Pharma

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Acasti Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Acasti Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalyst Biosciences and Acasti Pharma

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

The idea behind Catalyst Biosciences and Acasti Pharma 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.