Assuming 30 trading days horizon, Emisphere Technologies Inc. is expected to generate 3.4 times more return on investment than Nektar. However, Emisphere is 3.4 times more volatile than Nektar Therapeutics. It trades about -0.05 of its potential returns per unit of risk. Nektar Therapeutics is currently generating about -0.17 per unit of risk. If you would invest 20.00 in Emisphere Technologies Inc. on April 26, 2012 and sell it today you would earn a total of 3.00 from holding Emisphere Technologies Inc. or generate 15.0% return on investment over 30 days.
Diversification
Good diversification
Overlapping area represents amount of risk that can be diversified away by holding Emisphere Technologies Inc. and Nektar Therapeutics in the same portfolio (assuming nothing else is changed)