Correlation Between Connect Biopharma and Emergent Biosolutions
Can any of the company-specific risk be diversified away by investing in both Connect Biopharma 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 Connect Biopharma and Emergent Biosolutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Connect Biopharma Holdings and Emergent Biosolutions, you can compare the effects of market volatilities on Connect Biopharma 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 Connect Biopharma with a short position of Emergent Biosolutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connect Biopharma and Emergent Biosolutions.
Diversification Opportunities for Connect Biopharma and Emergent Biosolutions
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Connect and Emergent is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Connect Biopharma Holdings and Emergent Biosolutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Biosolutions and Connect Biopharma 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 Connect Biopharma Holdings 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 Connect Biopharma i.e., Connect Biopharma and Emergent Biosolutions go up and down completely randomly.
Pair Corralation between Connect Biopharma and Emergent Biosolutions
Given the investment horizon of 90 days Connect Biopharma Holdings is expected to under-perform the Emergent Biosolutions. But the stock apears to be less risky and, when comparing its historical volatility, Connect Biopharma Holdings is 1.44 times less risky than Emergent Biosolutions. The stock trades about -0.03 of its potential returns per unit of risk. The Emergent Biosolutions is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 667.00 in Emergent Biosolutions on September 3, 2024 and sell it today you would earn a total of 345.00 from holding Emergent Biosolutions or generate 51.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Connect Biopharma Holdings vs. Emergent Biosolutions
Performance |
| Timeline |
| Connect Biopharma |
| Emergent Biosolutions |
Connect Biopharma and Emergent Biosolutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connect Biopharma and Emergent Biosolutions
The main advantage of trading using opposite Connect Biopharma and Emergent Biosolutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connect Biopharma 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.| Connect Biopharma vs. DiaMedica Therapeutics | Connect Biopharma vs. Lyra Therapeutics | Connect Biopharma vs. Centessa Pharmaceuticals PLC |
| Emergent Biosolutions vs. Connect Biopharma Holdings | Emergent Biosolutions vs. Acumen Pharmaceuticals | Emergent Biosolutions vs. Nuvation Bio | Emergent Biosolutions vs. Eledon Pharmaceuticals |
Check out your portfolio center.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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