Correlation Between Evotec SE and Collegium Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Evotec SE and Collegium Pharmaceutical 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 Collegium Pharmaceutical 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 Collegium Pharmaceutical, you can compare the effects of market volatilities on Evotec SE and Collegium Pharmaceutical 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 Collegium Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evotec SE and Collegium Pharmaceutical.
Diversification Opportunities for Evotec SE and Collegium Pharmaceutical
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Evotec and Collegium is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Evotec SE ADR and Collegium Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collegium Pharmaceutical 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 Collegium Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collegium Pharmaceutical has no effect on the direction of Evotec SE i.e., Evotec SE and Collegium Pharmaceutical go up and down completely randomly.
Pair Corralation between Evotec SE and Collegium Pharmaceutical
Considering the 90-day investment horizon Evotec SE ADR is expected to under-perform the Collegium Pharmaceutical. In addition to that, Evotec SE is 1.65 times more volatile than Collegium Pharmaceutical. It trades about -0.01 of its total potential returns per unit of risk. Collegium Pharmaceutical is currently generating about 0.04 per unit of volatility. If you would invest 2,273 in Collegium Pharmaceutical on August 24, 2024 and sell it today you would earn a total of 723.00 from holding Collegium Pharmaceutical or generate 31.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evotec SE ADR vs. Collegium Pharmaceutical
Performance |
| Timeline |
| Evotec SE ADR |
| Collegium Pharmaceutical |
Evotec SE and Collegium Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evotec SE and Collegium Pharmaceutical
The main advantage of trading using opposite Evotec SE and Collegium Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evotec SE position performs unexpectedly, Collegium Pharmaceutical 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 Collegium Pharmaceutical will offset losses from the drop in Collegium Pharmaceutical's long position.| Evotec SE vs. Prestige Brand Holdings | Evotec SE vs. Supernus Pharmaceuticals | Evotec SE vs. Collegium Pharmaceutical | Evotec SE vs. ANI Pharmaceuticals |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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