Correlation Between Catalyst Pharmaceuticals and Immunitybio

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

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

Diversification Opportunities for Catalyst Pharmaceuticals and Immunitybio

0.75

Correlation Coefficient

Catalyst Pharmaceuticals  Immunitybio

Poor diversification

The 3 months correlation between Catalyst and Immunitybio is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and Immunitybio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immunitybio and Catalyst 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 Catalyst Pharmaceuticals are associated (or correlated) with Immunitybio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immunitybio has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and Immunitybio go up and down completely randomly.

Pair Corralation between Catalyst Pharmaceuticals and Immunitybio

Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to generate 3.29 times less return on investment than Immunitybio. But when comparing it to its historical volatility, Catalyst Pharmaceuticals is 3.42 times less risky than Immunitybio. It trades about 0.11 of its potential returns per unit of risk. Immunitybio is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  370.00  in Immunitybio on August 31, 2024 and sell it today you would earn a total of  140.00  from holding Immunitybio or generate 37.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Catalyst Pharmaceuticals  vs.  Immunitybio

Catalyst Pharmaceuticals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Pharmaceuticals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Catalyst Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Immunitybio

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Immunitybio are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Immunitybio showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalyst Pharmaceuticals and Immunitybio

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

The idea behind Catalyst Pharmaceuticals and Immunitybio 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.