Correlation Between Evotec SE and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Evotec SE and Bausch Health 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 Evotec SE and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evotec SE ADR and Bausch Health Companies, you can compare the effects of market volatilities on Evotec SE and Bausch Health 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 Evotec SE with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evotec SE and Bausch Health.
Diversification Opportunities for Evotec SE and Bausch Health
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Evotec and Bausch is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Evotec SE ADR and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies and Evotec SE 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 Evotec SE ADR are associated (or correlated) with Bausch Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of Evotec SE i.e., Evotec SE and Bausch Health go up and down completely randomly.
Pair Corralation between Evotec SE and Bausch Health
Considering the 90-day investment horizon Evotec SE ADR is expected to generate 1.79 times more return on investment than Bausch Health. However, Evotec SE is 1.79 times more volatile than Bausch Health Companies. It trades about 0.11 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.17 per unit of risk. If you would invest 345.00 in Evotec SE ADR on September 2, 2024 and sell it today you would earn a total of 124.00 from holding Evotec SE ADR or generate 35.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evotec SE ADR vs. Bausch Health Companies
Performance |
| Timeline |
| Evotec SE ADR |
| Bausch Health Companies |
Evotec SE and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evotec SE and Bausch Health
The main advantage of trading using opposite Evotec SE and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evotec SE position performs unexpectedly, Bausch Health 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 Bausch Health will offset losses from the drop in Bausch Health's long position.| Evotec SE vs. Tff Pharmaceuticals | Evotec SE vs. Eliem Therapeutics | Evotec SE vs. Inhibrx | Evotec SE vs. Enliven Therapeutics |
| Bausch Health vs. Crinetics Pharmaceuticals | Bausch Health vs. Enanta Pharmaceuticals | Bausch Health vs. Amicus Therapeutics | Bausch Health vs. Connect Biopharma Holdings |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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