Correlation Between Emergent Biosolutions and ABVC Biopharma

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

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

Diversification Opportunities for Emergent Biosolutions and ABVC Biopharma

-0.57

Correlation Coefficient

Emergent Biosolutions  ABVC Biopharma

Excellent diversification

The 3 months correlation between Emergent and ABVC is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Biosolutions and ABVC Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABVC Biopharma and Emergent Biosolutions 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 Emergent Biosolutions are associated (or correlated) with ABVC Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABVC Biopharma has no effect on the direction of Emergent Biosolutions i.e., Emergent Biosolutions and ABVC Biopharma go up and down completely randomly.

Pair Corralation between Emergent Biosolutions and ABVC Biopharma

Considering the 90-day investment horizon Emergent Biosolutions is expected to generate 1.09 times more return on investment than ABVC Biopharma. However, Emergent Biosolutions is 1.09 times more volatile than ABVC Biopharma. It trades about 0.11 of its potential returns per unit of risk. ABVC Biopharma is currently generating about -0.03 per unit of risk. If you would invest  739.00  in Emergent Biosolutions on September 3, 2024 and sell it today you would earn a total of  273.00  from holding Emergent Biosolutions or generate 36.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Emergent Biosolutions  vs.  ABVC Biopharma

Emergent Biosolutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emergent Biosolutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Emergent Biosolutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

ABVC Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABVC Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Emergent Biosolutions and ABVC Biopharma

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

The idea behind Emergent Biosolutions and ABVC Biopharma 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.