Correlation Between Esperion Therapeutics and Citius Pharmaceuticals

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

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

Diversification Opportunities for Esperion Therapeutics and Citius Pharmaceuticals

-0.84

Correlation Coefficient

Esperion Therapeutics  Citius Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Esperion and Citius is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Citius Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citius Pharmaceuticals and Esperion Therapeutics 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 Esperion Therapeutics are associated (or correlated) with Citius Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citius Pharmaceuticals has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Citius Pharmaceuticals go up and down completely randomly.

Pair Corralation between Esperion Therapeutics and Citius Pharmaceuticals

Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 0.68 times more return on investment than Citius Pharmaceuticals. However, Esperion Therapeutics is 1.47 times less risky than Citius Pharmaceuticals. It trades about 0.18 of its potential returns per unit of risk. Citius Pharmaceuticals is currently generating about -0.2 per unit of risk. If you would invest  175.00  in Esperion Therapeutics on September 12, 2024 and sell it today you would earn a total of  129.00  from holding Esperion Therapeutics or generate 73.71% return on investment over 90 days.

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

Esperion Therapeutics  vs.  Citius Pharmaceuticals

Esperion Therapeutics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Esperion Therapeutics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Esperion Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Citius Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citius Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Esperion Therapeutics and Citius Pharmaceuticals

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

The idea behind Esperion Therapeutics and Citius Pharmaceuticals 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.