Correlation Between Nabriva Therapeutics and Eiger Biopharmaceutica

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

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

Diversification Opportunities for Nabriva Therapeutics and Eiger Biopharmaceutica

0.51

Correlation Coefficient

Nabriva Therapeutics  Eiger Biopharmaceutica

Very weak diversification

The 3 months correlation between Nabriva and Eiger is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nabriva Therapeutics AG and Eiger Biopharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiger Biopharmaceuticals and Nabriva 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 Nabriva Therapeutics AG are associated (or correlated) with Eiger Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eiger Biopharmaceuticals has no effect on the direction of Nabriva Therapeutics i.e., Nabriva Therapeutics and Eiger Biopharmaceutica go up and down completely randomly.

Pair Corralation between Nabriva Therapeutics and Eiger Biopharmaceutica

Given the investment horizon of 90 days Nabriva Therapeutics AG is expected to generate 0.86 times more return on investment than Eiger Biopharmaceutica. However, Nabriva Therapeutics AG is 1.16 times less risky than Eiger Biopharmaceutica. It trades about 0.01 of its potential returns per unit of risk. Eiger Biopharmaceuticals is currently generating about -0.02 per unit of risk. If you would invest  196.00  in Nabriva Therapeutics AG on September 3, 2024 and sell it today you would lose (34.00) from holding Nabriva Therapeutics AG or give up 17.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.35%
Values	Daily Returns

Nabriva Therapeutics AG  vs.  Eiger Biopharmaceuticals

Nabriva Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nabriva Therapeutics AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nabriva Therapeutics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Eiger Biopharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nabriva Therapeutics and Eiger Biopharmaceutica

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

The idea behind Nabriva Therapeutics AG and Eiger Biopharmaceuticals 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.