Correlation Between Evolus and Procaps Group
Can any of the company-specific risk be diversified away by investing in both Evolus and Procaps Group 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 Procaps Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolus Inc and Procaps Group SA, you can compare the effects of market volatilities on Evolus and Procaps Group 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 Procaps Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolus and Procaps Group.
Diversification Opportunities for Evolus and Procaps Group
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Evolus and Procaps is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Evolus Inc and Procaps Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procaps Group SA 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 Procaps Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procaps Group SA has no effect on the direction of Evolus i.e., Evolus and Procaps Group go up and down completely randomly.
Pair Corralation between Evolus and Procaps Group
Given the investment horizon of 90 days Evolus Inc is expected to under-perform the Procaps Group. But the stock apears to be less risky and, when comparing its historical volatility, Evolus Inc is 6.19 times less risky than Procaps Group. The stock trades about -0.26 of its potential returns per unit of risk. The Procaps Group SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 189.00 in Procaps Group SA on August 27, 2024 and sell it today you would lose (62.00) from holding Procaps Group SA or give up 32.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolus Inc vs. Procaps Group SA
Performance |
| Timeline |
| Evolus Inc |
| Procaps Group SA |
Evolus and Procaps Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolus and Procaps Group
The main advantage of trading using opposite Evolus and Procaps Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolus position performs unexpectedly, Procaps Group 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 Procaps Group will offset losses from the drop in Procaps Group's long position.| Evolus vs. Collegium Pharmaceutical | Evolus vs. Phibro Animal Health | Evolus vs. ANI Pharmaceuticals | Evolus vs. Procaps Group SA |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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