Correlation Between Eagle Pharmaceuticals and GelStat Corp

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

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

Diversification Opportunities for Eagle Pharmaceuticals and GelStat Corp

-0.15

Correlation Coefficient

Eagle Pharmaceuticals  GelStat Corp

Good diversification

The 3 months correlation between Eagle and GelStat is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Pharmaceuticals and GelStat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GelStat Corp and Eagle 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 Eagle Pharmaceuticals are associated (or correlated) with GelStat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GelStat Corp has no effect on the direction of Eagle Pharmaceuticals i.e., Eagle Pharmaceuticals and GelStat Corp go up and down completely randomly.

Pair Corralation between Eagle Pharmaceuticals and GelStat Corp

Given the investment horizon of 90 days Eagle Pharmaceuticals is expected to under-perform the GelStat Corp. But the stock apears to be less risky and, when comparing its historical volatility, Eagle Pharmaceuticals is 2.99 times less risky than GelStat Corp. The stock trades about -0.12 of its potential returns per unit of risk. The GelStat Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.03  in GelStat Corp on March 11, 2024 and sell it today you would earn a total of  0.01  from holding GelStat Corp or generate 33.33% return on investment over 90 days.

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

Eagle Pharmaceuticals  vs.  GelStat Corp

Eagle Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

GelStat Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GelStat Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, GelStat Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagle Pharmaceuticals and GelStat Corp

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

The idea behind Eagle Pharmaceuticals and GelStat Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.