Correlation Between Evotec SE and Eliem Therapeutics
Can any of the company-specific risk be diversified away by investing in both Evotec SE and Eliem Therapeutics 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 Eliem Therapeutics 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 Eliem Therapeutics, you can compare the effects of market volatilities on Evotec SE and Eliem Therapeutics 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 Eliem Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evotec SE and Eliem Therapeutics.
Diversification Opportunities for Evotec SE and Eliem Therapeutics
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Evotec and Eliem is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Evotec SE ADR and Eliem Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eliem Therapeutics 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 Eliem Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eliem Therapeutics has no effect on the direction of Evotec SE i.e., Evotec SE and Eliem Therapeutics go up and down completely randomly.
Pair Corralation between Evotec SE and Eliem Therapeutics
Considering the 90-day investment horizon Evotec SE ADR is expected to generate 1.2 times more return on investment than Eliem Therapeutics. However, Evotec SE is 1.2 times more volatile than Eliem Therapeutics. It trades about 0.1 of its potential returns per unit of risk. Eliem Therapeutics is currently generating about -0.25 per unit of risk. If you would invest 377.00 in Evotec SE ADR on August 30, 2024 and sell it today you would earn a total of 106.00 from holding Evotec SE ADR or generate 28.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Evotec SE ADR vs. Eliem Therapeutics
Performance |
| Timeline |
| Evotec SE ADR |
| Eliem Therapeutics |
Evotec SE and Eliem Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evotec SE and Eliem Therapeutics
The main advantage of trading using opposite Evotec SE and Eliem Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evotec SE position performs unexpectedly, Eliem Therapeutics 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 Eliem Therapeutics will offset losses from the drop in Eliem Therapeutics' long position.| Evotec SE vs. Emergent Biosolutions | Evotec SE vs. Bausch Health Companies | Evotec SE vs. Neurocrine Biosciences | Evotec SE vs. Teva Pharma Industries |
| Eliem Therapeutics vs. Pmv Pharmaceuticals | Eliem Therapeutics vs. MediciNova | Eliem Therapeutics vs. Pharvaris BV | Eliem Therapeutics vs. PepGen |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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