Correlation Between China Pharma and Evoke Pharma
Can any of the company-specific risk be diversified away by investing in both China Pharma and Evoke Pharma 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 China Pharma and Evoke Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Pharma Holdings and Evoke Pharma, you can compare the effects of market volatilities on China Pharma and Evoke Pharma 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 China Pharma with a short position of Evoke Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Pharma and Evoke Pharma.
Diversification Opportunities for China Pharma and Evoke Pharma
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Evoke is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding China Pharma Holdings and Evoke Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evoke Pharma and China Pharma 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 China Pharma Holdings are associated (or correlated) with Evoke Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evoke Pharma has no effect on the direction of China Pharma i.e., China Pharma and Evoke Pharma go up and down completely randomly.
Pair Corralation between China Pharma and Evoke Pharma
Given the investment horizon of 90 days China Pharma Holdings is expected to generate 1.06 times more return on investment than Evoke Pharma. However, China Pharma is 1.06 times more volatile than Evoke Pharma. It trades about -0.03 of its potential returns per unit of risk. Evoke Pharma is currently generating about -0.05 per unit of risk. If you would invest 51.00 in China Pharma Holdings on August 24, 2024 and sell it today you would lose (32.00) from holding China Pharma Holdings or give up 62.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Pharma Holdings vs. Evoke Pharma
Performance |
| Timeline |
| China Pharma Holdings |
| Evoke Pharma |
China Pharma and Evoke Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Pharma and Evoke Pharma
The main advantage of trading using opposite China Pharma and Evoke Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Pharma position performs unexpectedly, Evoke Pharma 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 Evoke Pharma will offset losses from the drop in Evoke Pharma's long position.| China Pharma vs. Universe Pharmaceuticals | China Pharma vs. Sonoma Pharmaceuticals | China Pharma vs. Akanda Corp | China Pharma vs. Halo Collective |
| Evoke Pharma vs. Petros Pharmaceuticals | Evoke Pharma vs. Cumberland Pharmaceuticals | Evoke Pharma vs. Painreform | Evoke Pharma vs. Aquestive Therapeutics |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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