Correlation Between Evolus and Evotec SE
Can any of the company-specific risk be diversified away by investing in both Evolus 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 Evolus and Evotec SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolus Inc and Evotec SE ADR, you can compare the effects of market volatilities on Evolus 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 Evolus with a short position of Evotec SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolus and Evotec SE.
Diversification Opportunities for Evolus and Evotec SE
Pay attention - limited upside
The 3 months correlation between Evolus and Evotec is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Evolus Inc 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 Evolus 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 Evolus Inc 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 Evolus i.e., Evolus and Evotec SE go up and down completely randomly.
Pair Corralation between Evolus and Evotec SE
Given the investment horizon of 90 days Evolus Inc is expected to under-perform the Evotec SE. But the stock apears to be less risky and, when comparing its historical volatility, Evolus Inc is 2.09 times less risky than Evotec SE. The stock trades about -0.26 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolus Inc vs. Evotec SE ADR
Performance |
| Timeline |
| Evolus Inc |
| Evotec SE ADR |
Evolus and Evotec SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolus and Evotec SE
The main advantage of trading using opposite Evolus and Evotec SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolus 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.| Evolus vs. Collegium Pharmaceutical | Evolus vs. Phibro Animal Health | Evolus vs. ANI Pharmaceuticals | Evolus vs. Procaps Group SA |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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