Correlation Between Durect and Evotec SE
Can any of the company-specific risk be diversified away by investing in both Durect 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 Durect and Evotec SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Durect and Evotec SE ADR, you can compare the effects of market volatilities on Durect 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 Durect with a short position of Evotec SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Durect and Evotec SE.
Diversification Opportunities for Durect and Evotec SE
Excellent diversification
The 3 months correlation between Durect and Evotec is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Durect and Evotec SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec SE ADR and Durect 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 Durect 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 ADR has no effect on the direction of Durect i.e., Durect and Evotec SE go up and down completely randomly.
Pair Corralation between Durect and Evotec SE
Given the investment horizon of 90 days Durect is expected to under-perform the Evotec SE. But the stock apears to be less risky and, when comparing its historical volatility, Durect is 1.31 times less risky than Evotec SE. The stock trades about -0.27 of its potential returns per unit of risk. The Evotec SE ADR is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 386.00 in Evotec SE ADR on August 28, 2024 and sell it today you would earn a total of 103.00 from holding Evotec SE ADR or generate 26.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Durect vs. Evotec SE ADR
Performance |
| Timeline |
| Durect |
| Evotec SE ADR |
Durect and Evotec SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Durect and Evotec SE
The main advantage of trading using opposite Durect and Evotec SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Durect 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.| Durect vs. Shuttle Pharmaceuticals | Durect vs. Organogenesis Holdings | Durect vs. Alpha Teknova | Durect vs. Sonoma Pharmaceuticals |
| Evotec SE vs. Eliem Therapeutics | Evotec SE vs. HCW Biologics | Evotec SE vs. Scpharmaceuticals | Evotec SE vs. Milestone Pharmaceuticals |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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