Correlation Between Esperion Therapeutics and MAIA Biotechnology

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

By analyzing existing cross correlation between Esperion Therapeutics and MAIA Biotechnology, you can compare the effects of market volatilities on Esperion Therapeutics and MAIA Biotechnology 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 MAIA Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and MAIA Biotechnology.

Diversification Opportunities for Esperion Therapeutics and MAIA Biotechnology

-0.63

Correlation Coefficient

Esperion Therapeutics  MAIA Biotechnology

Excellent diversification

The 3 months correlation between Esperion and MAIA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and MAIA Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAIA Biotechnology 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 MAIA Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAIA Biotechnology has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and MAIA Biotechnology go up and down completely randomly.

Pair Corralation between Esperion Therapeutics and MAIA Biotechnology

Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 0.9 times more return on investment than MAIA Biotechnology. However, Esperion Therapeutics is 1.11 times less risky than MAIA Biotechnology. It trades about 0.18 of its potential returns per unit of risk. MAIA Biotechnology is currently generating about -0.16 per unit of risk. If you would invest  213.00  in Esperion Therapeutics on August 31, 2024 and sell it today you would earn a total of  41.00  from holding Esperion Therapeutics or generate 19.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Esperion Therapeutics  vs.  MAIA Biotechnology

Esperion Therapeutics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Esperion Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Esperion Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

MAIA Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAIA Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Esperion Therapeutics and MAIA Biotechnology

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

The idea behind Esperion Therapeutics and MAIA Biotechnology 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.