Correlation Between ANI Pharmaceuticals and Emergent Biosolutions

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

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

Diversification Opportunities for ANI Pharmaceuticals and Emergent Biosolutions

0.17

Correlation Coefficient

ANI Pharmaceuticals  Emergent Biosolutions

Average diversification

The 3 months correlation between ANI and Emergent is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding ANI Pharmaceuticals and Emergent Biosolutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Biosolutions and ANI Pharmaceuticals 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 ANI Pharmaceuticals 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 ANI Pharmaceuticals i.e., ANI Pharmaceuticals and Emergent Biosolutions go up and down completely randomly.

Pair Corralation between ANI Pharmaceuticals and Emergent Biosolutions

Given the investment horizon of 90 days ANI Pharmaceuticals is expected to generate 13.45 times less return on investment than Emergent Biosolutions. But when comparing it to its historical volatility, ANI Pharmaceuticals is 4.6 times less risky than Emergent Biosolutions. It trades about 0.03 of its potential returns per unit of risk. Emergent Biosolutions is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  234.00  in Emergent Biosolutions on September 12, 2024 and sell it today you would earn a total of  622.00  from holding Emergent Biosolutions or generate 265.81% return on investment over 90 days.

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

ANI Pharmaceuticals  vs.  Emergent Biosolutions

ANI Pharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ANI Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, ANI Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Emergent Biosolutions

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Emergent Biosolutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental drivers, Emergent Biosolutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ANI Pharmaceuticals and Emergent Biosolutions

The main advantage of trading using opposite ANI Pharmaceuticals and Emergent Biosolutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANI Pharmaceuticals 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 ANI Pharmaceuticals 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.