Correlation Between Hypera SA and Emergent Biosolutions

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

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

Diversification Opportunities for Hypera SA and Emergent Biosolutions

0.04

Correlation Coefficient

Hypera SA  Emergent Biosolutions

Significant diversification

The 3 months correlation between Hypera and Emergent is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hypera SA and Emergent Biosolutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Biosolutions and Hypera SA 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 Hypera SA 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 Hypera SA i.e., Hypera SA and Emergent Biosolutions go up and down completely randomly.

Pair Corralation between Hypera SA and Emergent Biosolutions

Assuming the 90 days horizon Hypera SA is expected to under-perform the Emergent Biosolutions. In addition to that, Hypera SA is 1.33 times more volatile than Emergent Biosolutions. It trades about -0.03 of its total potential returns per unit of risk. Emergent Biosolutions is currently generating about 0.05 per unit of volatility. 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	100.0%
Values	Daily Returns

Hypera SA  vs.  Emergent Biosolutions

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.

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.

Pair Trading with Hypera SA and Emergent Biosolutions

The main advantage of trading using opposite Hypera SA and Emergent Biosolutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hypera SA 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 Hypera SA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.