Correlation Between Esperion Therapeutics and OraSure Technologies

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

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

Diversification Opportunities for Esperion Therapeutics and OraSure Technologies

-0.69

Correlation Coefficient

Esperion Therapeutics  OraSure Technologies

Excellent diversification

The 3 months correlation between Esperion and OraSure is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and OraSure Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OraSure Technologies 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 OraSure Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OraSure Technologies has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and OraSure Technologies go up and down completely randomly.

Pair Corralation between Esperion Therapeutics and OraSure Technologies

Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 2.34 times more return on investment than OraSure Technologies. However, Esperion Therapeutics is 2.34 times more volatile than OraSure Technologies. It trades about 0.16 of its potential returns per unit of risk. OraSure Technologies is currently generating about -0.1 per unit of risk. If you would invest  183.00  in Esperion Therapeutics on September 2, 2024 and sell it today you would earn a total of  97.00  from holding Esperion Therapeutics or generate 53.01% return on investment over 90 days.

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

Esperion Therapeutics  vs.  OraSure Technologies

Esperion Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Esperion Therapeutics are ranked lower than 12 (%) 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.

OraSure Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OraSure Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Esperion Therapeutics and OraSure Technologies

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

The idea behind Esperion Therapeutics and OraSure Technologies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.