Correlation Between LENSAR and Catalent

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

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

Diversification Opportunities for LENSAR and Catalent

0.29

Correlation Coefficient

LENSAR  Catalent

Modest diversification

The 3 months correlation between LENSAR and Catalent is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and LENSAR 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 LENSAR Inc 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 LENSAR i.e., LENSAR and Catalent go up and down completely randomly.

Pair Corralation between LENSAR and Catalent

Given the investment horizon of 90 days LENSAR Inc is expected to generate 7.11 times more return on investment than Catalent. However, LENSAR is 7.11 times more volatile than Catalent. It trades about 0.21 of its potential returns per unit of risk. Catalent is currently generating about 0.14 per unit of risk. If you would invest  442.00  in LENSAR Inc on September 24, 2024 and sell it today you would earn a total of  328.00  from holding LENSAR Inc or generate 74.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

LENSAR Inc  vs.  Catalent

LENSAR Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Catalent

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 11 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with LENSAR and Catalent

The main advantage of trading using opposite LENSAR and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LENSAR 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 LENSAR Inc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.