Correlation Between Esperion Therapeutics and Galectin Therapeutics

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

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

Diversification Opportunities for Esperion Therapeutics and Galectin Therapeutics

-0.2

Correlation Coefficient

Esperion Therapeutics  Galectin Therapeutics

Good diversification

The 3 months correlation between Esperion and Galectin is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Galectin Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galectin Therapeutics 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 Galectin Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galectin Therapeutics has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Galectin Therapeutics go up and down completely randomly.

Pair Corralation between Esperion Therapeutics and Galectin Therapeutics

Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 0.77 times more return on investment than Galectin Therapeutics. However, Esperion Therapeutics is 1.31 times less risky than Galectin Therapeutics. It trades about 0.11 of its potential returns per unit of risk. Galectin Therapeutics is currently generating about -0.11 per unit of risk. If you would invest  165.00  in Esperion Therapeutics on September 30, 2024 and sell it today you would earn a total of  63.00  from holding Esperion Therapeutics or generate 38.18% return on investment over 90 days.

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

Esperion Therapeutics  vs.  Galectin Therapeutics

Esperion Therapeutics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Esperion Therapeutics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Esperion Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Galectin Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galectin Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Esperion Therapeutics and Galectin Therapeutics

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

The idea behind Esperion Therapeutics and Galectin 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.