Correlation Between Emergent Biosolutions and Hepion Pharmaceuticals

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

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

Diversification Opportunities for Emergent Biosolutions and Hepion Pharmaceuticals

0.06

Correlation Coefficient

Emergent Biosolutions  Hepion Pharmaceuticals

Significant diversification

The 3 months correlation between Emergent and Hepion is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Biosolutions and Hepion Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hepion Pharmaceuticals and Emergent Biosolutions 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 Emergent Biosolutions are associated (or correlated) with Hepion Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hepion Pharmaceuticals has no effect on the direction of Emergent Biosolutions i.e., Emergent Biosolutions and Hepion Pharmaceuticals go up and down completely randomly.

Pair Corralation between Emergent Biosolutions and Hepion Pharmaceuticals

Considering the 90-day investment horizon Emergent Biosolutions is expected to under-perform the Hepion Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Emergent Biosolutions is 1.16 times less risky than Hepion Pharmaceuticals. The stock trades about -0.5 of its potential returns per unit of risk. The Hepion Pharmaceuticals is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Hepion Pharmaceuticals on June 26, 2024 and sell it today you would lose (9.00) from holding Hepion Pharmaceuticals or give up 11.25% of portfolio value over 90 days.

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

Emergent Biosolutions  vs.  Hepion Pharmaceuticals

Emergent Biosolutions

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Emergent Biosolutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Emergent Biosolutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hepion Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hepion Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in October 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Emergent Biosolutions and Hepion Pharmaceuticals

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

The idea behind Emergent Biosolutions and Hepion Pharmaceuticals 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.