Correlation Between Emergent Biosolutions and NRBO Old

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

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

Diversification Opportunities for Emergent Biosolutions and NRBO Old

0.61

Correlation Coefficient

Emergent Biosolutions  NRBO Old

Poor diversification

The 3 months correlation between Emergent and NRBO is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Biosolutions and NRBO Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRBO Old 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 NRBO Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRBO Old has no effect on the direction of Emergent Biosolutions i.e., Emergent Biosolutions and NRBO Old go up and down completely randomly.

Pair Corralation between Emergent Biosolutions and NRBO Old

Considering the 90-day investment horizon Emergent Biosolutions is expected to under-perform the NRBO Old. But the stock apears to be less risky and, when comparing its historical volatility, Emergent Biosolutions is 1.19 times less risky than NRBO Old. The stock trades about -0.23 of its potential returns per unit of risk. The NRBO Old is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  198.00  in NRBO Old on December 29, 2024 and sell it today you would lose (9.00) from holding NRBO Old or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	34.43%
Values	Daily Returns

Emergent Biosolutions  vs.  NRBO Old

Emergent Biosolutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emergent Biosolutions 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 fundamental drivers remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NRBO Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days NRBO Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, NRBO Old is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Emergent Biosolutions and NRBO Old

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

The idea behind Emergent Biosolutions and NRBO Old 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.