Correlation Between Emergent Biosolutions and Hypera SA

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

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

Diversification Opportunities for Emergent Biosolutions and Hypera SA

0.04

Correlation Coefficient

Emergent Biosolutions  Hypera SA

Significant diversification

The 3 months correlation between Emergent and Hypera is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Biosolutions and Hypera SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hypera SA 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 Hypera SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hypera SA has no effect on the direction of Emergent Biosolutions i.e., Emergent Biosolutions and Hypera SA go up and down completely randomly.

Pair Corralation between Emergent Biosolutions and Hypera SA

Considering the 90-day investment horizon Emergent Biosolutions is expected to generate 0.74 times more return on investment than Hypera SA. However, Emergent Biosolutions is 1.36 times less risky than Hypera SA. It trades about 0.05 of its potential returns per unit of risk. Hypera SA is currently generating about -0.03 per unit of risk. If you would invest  929.00  in Emergent Biosolutions on October 4, 2024 and sell it today you would earn a total of  27.00  from holding Emergent Biosolutions or generate 2.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Emergent Biosolutions  vs.  Hypera SA

Emergent Biosolutions

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Emergent Biosolutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Emergent Biosolutions may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hypera SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Emergent Biosolutions and Hypera SA

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

The idea behind Emergent Biosolutions and Hypera SA 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .