Correlation Between Talphera and Emergent Biosolutions

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

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

Diversification Opportunities for Talphera and Emergent Biosolutions

0.12

Correlation Coefficient

Talphera  Emergent Biosolutions

Average diversification

The 3 months correlation between Talphera and Emergent is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Talphera and Emergent Biosolutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Biosolutions and Talphera 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 Talphera are associated (or correlated) with Emergent Biosolutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Biosolutions has no effect on the direction of Talphera i.e., Talphera and Emergent Biosolutions go up and down completely randomly.

Pair Corralation between Talphera and Emergent Biosolutions

Given the investment horizon of 90 days Talphera is expected to under-perform the Emergent Biosolutions. In addition to that, Talphera is 1.13 times more volatile than Emergent Biosolutions. It trades about -0.04 of its total potential returns per unit of risk. Emergent Biosolutions is currently generating about 0.1 per unit of volatility. If you would invest  606.00  in Emergent Biosolutions on September 22, 2024 and sell it today you would earn a total of  204.00  from holding Emergent Biosolutions or generate 33.66% return on investment over 90 days.

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

Talphera  vs.  Emergent Biosolutions

Talphera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talphera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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

Pair Trading with Talphera and Emergent Biosolutions

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

The idea behind Talphera and Emergent Biosolutions 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.