Correlation Between Catalent and Eyenovia

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

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

Diversification Opportunities for Catalent and Eyenovia

-0.57

Correlation Coefficient

Catalent  Eyenovia

Excellent diversification

The 3 months correlation between Catalent and Eyenovia is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Eyenovia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eyenovia and Catalent 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 Catalent are associated (or correlated) with Eyenovia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eyenovia has no effect on the direction of Catalent i.e., Catalent and Eyenovia go up and down completely randomly.

Pair Corralation between Catalent and Eyenovia

Given the investment horizon of 90 days Catalent is expected to generate 0.05 times more return on investment than Eyenovia. However, Catalent is 19.13 times less risky than Eyenovia. It trades about 0.13 of its potential returns per unit of risk. Eyenovia is currently generating about -0.14 per unit of risk. If you would invest  6,035  in Catalent on September 17, 2024 and sell it today you would earn a total of  312.50  from holding Catalent or generate 5.18% return on investment over 90 days.

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

Catalent  vs.  Eyenovia

Catalent

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Eyenovia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eyenovia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Catalent and Eyenovia

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

The idea behind Catalent and Eyenovia 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.