Correlation Between Emergent Biosolutions and Acorda Therapeutics

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

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

Diversification Opportunities for Emergent Biosolutions and Acorda Therapeutics

0.37

Correlation Coefficient

Emergent Biosolutions  Acorda Therapeutics

Weak diversification

The 3 months correlation between Emergent and Acorda is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Biosolutions and Acorda Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acorda Therapeutics 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 Acorda Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acorda Therapeutics has no effect on the direction of Emergent Biosolutions i.e., Emergent Biosolutions and Acorda Therapeutics go up and down completely randomly.

Pair Corralation between Emergent Biosolutions and Acorda Therapeutics

If you would invest  690.00  in Emergent Biosolutions on September 18, 2024 and sell it today you would earn a total of  197.00  from holding Emergent Biosolutions or generate 28.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Emergent Biosolutions  vs.  Acorda Therapeutics

Emergent Biosolutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emergent Biosolutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental drivers, Emergent Biosolutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Acorda Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acorda Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Acorda Therapeutics is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Emergent Biosolutions and Acorda Therapeutics

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

The idea behind Emergent Biosolutions and Acorda Therapeutics 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.