Correlation Between Cipher Pharmaceuticals and EGF Theramed

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

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

Diversification Opportunities for Cipher Pharmaceuticals and EGF Theramed

0.04

Correlation Coefficient

Cipher Pharmaceuticals  EGF Theramed

Significant diversification

The 3 months correlation between Cipher and EGF is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cipher Pharmaceuticals and EGF Theramed Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGF Theramed Health and Cipher 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 Cipher Pharmaceuticals are associated (or correlated) with EGF Theramed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGF Theramed Health has no effect on the direction of Cipher Pharmaceuticals i.e., Cipher Pharmaceuticals and EGF Theramed go up and down completely randomly.

Pair Corralation between Cipher Pharmaceuticals and EGF Theramed

Assuming the 90 days horizon Cipher Pharmaceuticals is expected to generate 1.32 times less return on investment than EGF Theramed. In addition to that, Cipher Pharmaceuticals is 1.29 times more volatile than EGF Theramed Health. It trades about 0.09 of its total potential returns per unit of risk. EGF Theramed Health is currently generating about 0.15 per unit of volatility. If you would invest  6.20  in EGF Theramed Health on July 22, 2025 and sell it today you would earn a total of  1.40  from holding EGF Theramed Health or generate 22.58% return on investment over 90 days.

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

Cipher Pharmaceuticals  vs.  EGF Theramed Health

Cipher Pharmaceuticals

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Cipher Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Cipher Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

EGF Theramed Health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EGF Theramed Health are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, EGF Theramed reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cipher Pharmaceuticals and EGF Theramed

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

The idea behind Cipher Pharmaceuticals and EGF Theramed Health 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.