Correlation Between Collegium Pharmaceutical and Evotec SE
Can any of the company-specific risk be diversified away by investing in both Collegium Pharmaceutical and Evotec SE 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 Collegium Pharmaceutical and Evotec SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collegium Pharmaceutical and Evotec SE, you can compare the effects of market volatilities on Collegium Pharmaceutical and Evotec SE 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 Collegium Pharmaceutical with a short position of Evotec SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collegium Pharmaceutical and Evotec SE.
Diversification Opportunities for Collegium Pharmaceutical and Evotec SE
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Collegium and Evotec is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Evotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec SE and Collegium Pharmaceutical 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 Collegium Pharmaceutical are associated (or correlated) with Evotec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evotec SE has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Evotec SE go up and down completely randomly.
Pair Corralation between Collegium Pharmaceutical and Evotec SE
Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 0.71 times more return on investment than Evotec SE. However, Collegium Pharmaceutical is 1.41 times less risky than Evotec SE. It trades about 0.05 of its potential returns per unit of risk. Evotec SE is currently generating about -0.09 per unit of risk. If you would invest 2,218 in Collegium Pharmaceutical on September 2, 2024 and sell it today you would earn a total of 832.00 from holding Collegium Pharmaceutical or generate 37.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Collegium Pharmaceutical vs. Evotec SE
Performance |
| Timeline |
| Collegium Pharmaceutical |
| Evotec SE |
Collegium Pharmaceutical and Evotec SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collegium Pharmaceutical and Evotec SE
The main advantage of trading using opposite Collegium Pharmaceutical and Evotec SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collegium Pharmaceutical position performs unexpectedly, Evotec SE 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 Evotec SE will offset losses from the drop in Evotec SE's long position.| Collegium Pharmaceutical vs. Phibro Animal Health | Collegium Pharmaceutical vs. ANI Pharmaceuticals | Collegium Pharmaceutical vs. Procaps Group SA | Collegium Pharmaceutical vs. Amphastar P |
| Evotec SE vs. Pacira BioSciences, | Evotec SE vs. Collegium Pharmaceutical | Evotec SE vs. Prestige Brand Holdings | Evotec SE vs. Phibro Animal Health |
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 the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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