Correlation Between Context Therapeutics and Emergent Biosolutions

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

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

Diversification Opportunities for Context Therapeutics and Emergent Biosolutions

-0.14

Correlation Coefficient

Context Therapeutics  Emergent Biosolutions

Good diversification

The 3 months correlation between Context and Emergent is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Context Therapeutics and Emergent Biosolutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Biosolutions and Context 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 Context Therapeutics are associated (or correlated) with Emergent Biosolutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Biosolutions has no effect on the direction of Context Therapeutics i.e., Context Therapeutics and Emergent Biosolutions go up and down completely randomly.

Pair Corralation between Context Therapeutics and Emergent Biosolutions

Given the investment horizon of 90 days Context Therapeutics is expected to under-perform the Emergent Biosolutions. In addition to that, Context Therapeutics is 1.08 times more volatile than Emergent Biosolutions. It trades about -0.3 of its total potential returns per unit of risk. Emergent Biosolutions is currently generating about -0.01 per unit of volatility. If you would invest  860.00  in Emergent Biosolutions on September 17, 2024 and sell it today you would lose (12.00) from holding Emergent Biosolutions or give up 1.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Context Therapeutics  vs.  Emergent Biosolutions

Context Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Context Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Emergent Biosolutions

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emergent Biosolutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Emergent Biosolutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Context Therapeutics and Emergent Biosolutions

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

The idea behind Context Therapeutics and Emergent Biosolutions 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.