Correlation Between Terns Pharmaceuticals and Catalyst Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Terns 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 Terns 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 Terns Pharmaceuticals and Catalyst Pharmaceuticals, you can compare the effects of market volatilities on Terns 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 Terns Pharmaceuticals with a short position of Catalyst Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terns Pharmaceuticals and Catalyst Pharmaceuticals.
Diversification Opportunities for Terns Pharmaceuticals and Catalyst Pharmaceuticals
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Terns and Catalyst is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Terns Pharmaceuticals and Catalyst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Pharmaceuticals and Terns 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 Terns 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 Terns Pharmaceuticals i.e., Terns Pharmaceuticals and Catalyst Pharmaceuticals go up and down completely randomly.
Pair Corralation between Terns Pharmaceuticals and Catalyst Pharmaceuticals
Given the investment horizon of 90 days Terns Pharmaceuticals is expected to generate 7.14 times more return on investment than Catalyst Pharmaceuticals. However, Terns Pharmaceuticals is 7.14 times more volatile than Catalyst Pharmaceuticals. It trades about 0.36 of its potential returns per unit of risk. Catalyst Pharmaceuticals is currently generating about 0.18 per unit of risk. If you would invest 806.00 in Terns Pharmaceuticals on September 25, 2025 and sell it today you would earn a total of 3,433 from holding Terns Pharmaceuticals or generate 425.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.62% |
| Values | Daily Returns |
Terns Pharmaceuticals vs. Catalyst Pharmaceuticals
Performance |
| Timeline |
| Terns Pharmaceuticals |
| Catalyst Pharmaceuticals |
Terns Pharmaceuticals and Catalyst Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terns Pharmaceuticals and Catalyst Pharmaceuticals
The main advantage of trading using opposite Terns Pharmaceuticals and Catalyst Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terns 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.| Terns Pharmaceuticals vs. Oric Pharmaceuticals | Terns Pharmaceuticals vs. Precigen | Terns Pharmaceuticals vs. Immatics NV | Terns Pharmaceuticals vs. Enliven Therapeutics |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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