Correlation Between Eagle Pharmaceuticals and Entia Biosciences

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

Diversification Opportunities for Eagle Pharmaceuticals and Entia Biosciences

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Eagle and Entia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Pharmaceuticals and Entia Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entia Biosciences and Eagle Pharmaceuticals 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 Eagle Pharmaceuticals are associated (or correlated) with Entia Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entia Biosciences has no effect on the direction of Eagle Pharmaceuticals i.e., Eagle Pharmaceuticals and Entia Biosciences go up and down completely randomly.

Pair Corralation between Eagle Pharmaceuticals and Entia Biosciences

Given the investment horizon of 90 days Eagle Pharmaceuticals is expected to under-perform the Entia Biosciences. In addition to that, Eagle Pharmaceuticals is 1.27 times more volatile than Entia Biosciences. It trades about -0.11 of its total potential returns per unit of risk. Entia Biosciences is currently generating about -0.08 per unit of volatility. If you would invest  0.03  in Entia Biosciences on December 29, 2023 and sell it today you would lose (0.02) from holding Entia Biosciences or give up 66.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Eagle Pharmaceuticals  vs.  Entia Biosciences

 Performance 
       Timeline  
Eagle Pharmaceuticals 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days Entia Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Entia Biosciences is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Eagle Pharmaceuticals and Entia Biosciences Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eagle Pharmaceuticals and Entia Biosciences

The main advantage of trading using opposite Eagle Pharmaceuticals and Entia Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Pharmaceuticals position performs unexpectedly, Entia Biosciences 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 Entia Biosciences will offset losses from the drop in Entia Biosciences' long position.
The idea behind Eagle Pharmaceuticals and Entia Biosciences 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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