Correlation Between Esperion Therapeutics and ProQR Therapeutics

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

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

Diversification Opportunities for Esperion Therapeutics and ProQR Therapeutics

0.77

Correlation Coefficient

Esperion Therapeutics  ProQR Therapeutics

Poor diversification

The 3 months correlation between Esperion and ProQR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and ProQR Therapeutics BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProQR Therapeutics and Esperion Therapeutics 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 Esperion Therapeutics are associated (or correlated) with ProQR Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProQR Therapeutics has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and ProQR Therapeutics go up and down completely randomly.

Pair Corralation between Esperion Therapeutics and ProQR Therapeutics

Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 1.12 times more return on investment than ProQR Therapeutics. However, Esperion Therapeutics is 1.12 times more volatile than ProQR Therapeutics BV. It trades about 0.07 of its potential returns per unit of risk. ProQR Therapeutics BV is currently generating about -0.1 per unit of risk. If you would invest  206.00  in Esperion Therapeutics on August 20, 2024 and sell it today you would earn a total of  9.00  from holding Esperion Therapeutics or generate 4.37% return on investment over 90 days.

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

Esperion Therapeutics  vs.  ProQR Therapeutics BV

Esperion Therapeutics

Risk-Adjusted Performance

6 of 100

Modest

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

ProQR Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProQR Therapeutics BV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, ProQR Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Esperion Therapeutics and ProQR Therapeutics

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

The idea behind Esperion Therapeutics and ProQR Therapeutics BV 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.