Correlation Between Cabio Biotech and Esperion Therapeutics

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

Diversification Opportunities for Cabio Biotech and Esperion Therapeutics

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Cabio and Esperion is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cabio Biotech Wuhan and Esperion Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esperion Therapeutics and Cabio Biotech 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 Cabio Biotech Wuhan are associated (or correlated) with Esperion Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esperion Therapeutics has no effect on the direction of Cabio Biotech i.e., Cabio Biotech and Esperion Therapeutics go up and down completely randomly.

Pair Corralation between Cabio Biotech and Esperion Therapeutics

Assuming the 90 days trading horizon Cabio Biotech Wuhan is expected to under-perform the Esperion Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Cabio Biotech Wuhan is 3.52 times less risky than Esperion Therapeutics. The stock trades about -0.19 of its potential returns per unit of risk. The Esperion Therapeutics is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  254.00  in Esperion Therapeutics on September 9, 2025 and sell it today you would earn a total of  119.00  from holding Esperion Therapeutics or generate 46.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy92.19%
ValuesDaily Returns

Cabio Biotech Wuhan  vs.  Esperion Therapeutics

 Performance 
       Timeline  
Cabio Biotech Wuhan 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days Cabio Biotech Wuhan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2026. The current disturbance may also be a sign of long term up-swing for the company investors.
Esperion Therapeutics 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Esperion Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Esperion Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Cabio Biotech and Esperion Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cabio Biotech and Esperion Therapeutics

The main advantage of trading using opposite Cabio Biotech and Esperion Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabio Biotech position performs unexpectedly, Esperion Therapeutics 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 Esperion Therapeutics will offset losses from the drop in Esperion Therapeutics' long position.
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The idea behind Cabio Biotech Wuhan and Esperion Therapeutics 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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