Correlation Between Evoke Pharma and China Pharma
Can any of the company-specific risk be diversified away by investing in both Evoke Pharma and China Pharma 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 Evoke Pharma and China Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evoke Pharma and China Pharma Holdings, you can compare the effects of market volatilities on Evoke Pharma and China Pharma 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 Evoke Pharma with a short position of China Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evoke Pharma and China Pharma.
Diversification Opportunities for Evoke Pharma and China Pharma
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Evoke and China is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Evoke Pharma and China Pharma Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Pharma Holdings and Evoke Pharma 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 Evoke Pharma are associated (or correlated) with China Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Pharma Holdings has no effect on the direction of Evoke Pharma i.e., Evoke Pharma and China Pharma go up and down completely randomly.
Pair Corralation between Evoke Pharma and China Pharma
Given the investment horizon of 90 days Evoke Pharma is expected to generate 0.97 times more return on investment than China Pharma. However, Evoke Pharma is 1.03 times less risky than China Pharma. It trades about -0.01 of its potential returns per unit of risk. China Pharma Holdings is currently generating about -0.03 per unit of risk. If you would invest 530.00 in Evoke Pharma on October 25, 2024 and sell it today you would lose (77.00) from holding Evoke Pharma or give up 14.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evoke Pharma vs. China Pharma Holdings
Performance |
| Timeline |
| Evoke Pharma |
| China Pharma Holdings |
Evoke Pharma and China Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evoke Pharma and China Pharma
The main advantage of trading using opposite Evoke Pharma and China Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evoke Pharma position performs unexpectedly, China Pharma 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 China Pharma will offset losses from the drop in China Pharma's long position.| Evoke Pharma vs. Petros Pharmaceuticals | Evoke Pharma vs. Cumberland Pharmaceuticals | Evoke Pharma vs. Painreform | Evoke Pharma vs. Aquestive Therapeutics |
| China Pharma vs. Universe Pharmaceuticals | China Pharma vs. Sonoma Pharmaceuticals | China Pharma vs. Akanda Corp | China Pharma vs. Halo Collective |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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