Correlation Between China Pharma and Esperion Therapeutics
Can any of the company-specific risk be diversified away by investing in both China Pharma and Esperion Therapeutics 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 China Pharma and Esperion Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Pharma Holdings and Esperion Therapeutics, you can compare the effects of market volatilities on China Pharma and Esperion Therapeutics 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 China Pharma with a short position of Esperion Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Pharma and Esperion Therapeutics.
Diversification Opportunities for China Pharma and Esperion Therapeutics
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Esperion is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding China Pharma Holdings and Esperion Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esperion Therapeutics and China Pharma 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 China Pharma Holdings are associated (or correlated) with Esperion Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esperion Therapeutics has no effect on the direction of China Pharma i.e., China Pharma and Esperion Therapeutics go up and down completely randomly.
Pair Corralation between China Pharma and Esperion Therapeutics
Given the investment horizon of 90 days China Pharma Holdings is expected to under-perform the Esperion Therapeutics. In addition to that, China Pharma is 1.09 times more volatile than Esperion Therapeutics. It trades about -0.07 of its total potential returns per unit of risk. Esperion Therapeutics is currently generating about 0.0 per unit of volatility. If you would invest 633.00 in Esperion Therapeutics on August 28, 2024 and sell it today you would lose (376.00) from holding Esperion Therapeutics or give up 59.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Pharma Holdings vs. Esperion Therapeutics
Performance |
| Timeline |
| China Pharma Holdings |
| Esperion Therapeutics |
China Pharma and Esperion Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Pharma and Esperion Therapeutics
The main advantage of trading using opposite China Pharma and Esperion Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Pharma position performs unexpectedly, Esperion Therapeutics 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 Esperion Therapeutics will offset losses from the drop in Esperion Therapeutics' long position.| China Pharma vs. Universe Pharmaceuticals | China Pharma vs. Sonoma Pharmaceuticals | China Pharma vs. Akanda Corp | China Pharma vs. Halo Collective |
| Esperion Therapeutics vs. Eliem Therapeutics | Esperion Therapeutics vs. HCW Biologics | Esperion Therapeutics vs. Scpharmaceuticals | Esperion Therapeutics vs. Milestone 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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