Correlation Between Emergent Biosolutions and Cyclerion Therapeutics

Can any of the company-specific risk be diversified away by investing in both Emergent Biosolutions and Cyclerion 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 Cyclerion 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 Cyclerion Therapeutics, you can compare the effects of market volatilities on Emergent Biosolutions and Cyclerion 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 Cyclerion Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emergent Biosolutions and Cyclerion Therapeutics.

Diversification Opportunities for Emergent Biosolutions and Cyclerion Therapeutics

-0.41

Correlation Coefficient

Emergent Biosolutions  Cyclerion Therapeutics

Very good diversification

The 3 months correlation between Emergent and Cyclerion is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Biosolutions and Cyclerion Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyclerion 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 Cyclerion Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyclerion Therapeutics has no effect on the direction of Emergent Biosolutions i.e., Emergent Biosolutions and Cyclerion Therapeutics go up and down completely randomly.

Pair Corralation between Emergent Biosolutions and Cyclerion Therapeutics

Considering the 90-day investment horizon Emergent Biosolutions is expected to generate 0.52 times more return on investment than Cyclerion Therapeutics. However, Emergent Biosolutions is 1.91 times less risky than Cyclerion Therapeutics. It trades about 0.11 of its potential returns per unit of risk. Cyclerion Therapeutics is currently generating about 0.02 per unit of risk. If you would invest  739.00  in Emergent Biosolutions on August 31, 2024 and sell it today you would earn a total of  272.00  from holding Emergent Biosolutions or generate 36.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Emergent Biosolutions  vs.  Cyclerion Therapeutics

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 unfluctuating fundamental drivers, Emergent Biosolutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cyclerion Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cyclerion Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Cyclerion Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Emergent Biosolutions and Cyclerion Therapeutics

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

The idea behind Emergent Biosolutions and Cyclerion 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.