Correlation Between Esperion Therapeutics and CEL SCI

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

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

Diversification Opportunities for Esperion Therapeutics and CEL SCI

-0.76

Correlation Coefficient

Esperion Therapeutics  CEL SCI

Pay attention - limited upside

The 3 months correlation between Esperion and CEL is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and CEL SCI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEL SCI Corp and Esperion 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 Esperion Therapeutics are associated (or correlated) with CEL SCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEL SCI Corp has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and CEL SCI go up and down completely randomly.

Pair Corralation between Esperion Therapeutics and CEL SCI

Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 1.45 times less return on investment than CEL SCI. But when comparing it to its historical volatility, Esperion Therapeutics is 1.02 times less risky than CEL SCI. It trades about 0.1 of its potential returns per unit of risk. CEL SCI Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  56.00  in CEL SCI Corp on September 17, 2024 and sell it today you would earn a total of  10.99  from holding CEL SCI Corp or generate 19.63% return on investment over 90 days.

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

Esperion Therapeutics  vs.  CEL SCI Corp

Esperion Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Esperion Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Esperion Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

CEL SCI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEL SCI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Esperion Therapeutics and CEL SCI

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

The idea behind Esperion Therapeutics and CEL SCI 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.