Correlation Between Emergent Biosolutions and Amneal Pharmaceuticals

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Can any of the company-specific risk be diversified away by investing in both Emergent Biosolutions and Amneal 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 Emergent Biosolutions and Amneal Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emergent Biosolutions and Amneal Pharmaceuticals, you can compare the effects of market volatilities on Emergent Biosolutions and Amneal 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 Emergent Biosolutions with a short position of Amneal Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emergent Biosolutions and Amneal Pharmaceuticals.

Diversification Opportunities for Emergent Biosolutions and Amneal Pharmaceuticals

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Emergent and Amneal is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Biosolutions and Amneal Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amneal Pharmaceuticals and Emergent Biosolutions 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 Emergent Biosolutions are associated (or correlated) with Amneal Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amneal Pharmaceuticals has no effect on the direction of Emergent Biosolutions i.e., Emergent Biosolutions and Amneal Pharmaceuticals go up and down completely randomly.

Pair Corralation between Emergent Biosolutions and Amneal Pharmaceuticals

Considering the 90-day investment horizon Emergent Biosolutions is expected to generate 1.02 times more return on investment than Amneal Pharmaceuticals. However, Emergent Biosolutions is 1.02 times more volatile than Amneal Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. Amneal Pharmaceuticals is currently generating about 0.03 per unit of risk. If you would invest  3,016  in Emergent Biosolutions on May 18, 2022 and sell it today you would earn a total of  34.00  from holding Emergent Biosolutions or generate 1.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Emergent Biosolutions  vs.  Amneal Pharmaceuticals

 Performance (%) 
       Timeline  
Emergent Biosolutions 
Emergent Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Emergent Biosolutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, Emergent Biosolutions reported solid returns over the last few months and may actually be approaching a breakup point.

Emergent Price Channel

Amneal Pharmaceuticals 
Amneal Performance
0 of 100
Over the last 90 days Amneal Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Amneal Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Amneal Price Channel

Emergent Biosolutions and Amneal Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Emergent Biosolutions and Amneal Pharmaceuticals

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

Emergent Biosolutions

Pair trading matchups for Emergent Biosolutions

The idea behind Emergent Biosolutions and Amneal 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.

Amneal Pharmaceuticals

Pair trading matchups for Amneal Pharmaceuticals

Check out your portfolio center. 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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