Correlation Between Emergent Biosolutions and Cns Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Emergent Biosolutions and Cns 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 Cns 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 Cns Pharmaceuticals, you can compare the effects of market volatilities on Emergent Biosolutions and Cns 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 Cns Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emergent Biosolutions and Cns Pharmaceuticals.

Diversification Opportunities for Emergent Biosolutions and Cns Pharmaceuticals

-0.23

Correlation Coefficient

Emergent Biosolutions  Cns Pharmaceuticals

Very good diversification

The 3 months correlation between Emergent and Cns is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Biosolutions and Cns Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cns 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 Cns Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cns Pharmaceuticals has no effect on the direction of Emergent Biosolutions i.e., Emergent Biosolutions and Cns Pharmaceuticals go up and down completely randomly.

Pair Corralation between Emergent Biosolutions and Cns Pharmaceuticals

Considering the 90-day investment horizon Emergent Biosolutions is expected to generate 0.89 times more return on investment than Cns Pharmaceuticals. However, Emergent Biosolutions is 1.13 times less risky than Cns Pharmaceuticals. It trades about 0.18 of its potential returns per unit of risk. Cns Pharmaceuticals is currently generating about -0.04 per unit of risk. If you would invest  777.00  in Emergent Biosolutions on August 11, 2024 and sell it today you would earn a total of  400.00  from holding Emergent Biosolutions or generate 51.48% return on investment over 90 days.

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

Emergent Biosolutions  vs.  Cns Pharmaceuticals

Emergent Biosolutions

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emergent Biosolutions are ranked lower than 12 (%) 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.

Cns Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cns Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Emergent Biosolutions and Cns Pharmaceuticals

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

The idea behind Emergent Biosolutions and Cns 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 Global Correlations module to find global opportunities by holding instruments from different markets.