Correlation Between Alvotech and Evoke Pharma

Can any of the company-specific risk be diversified away by investing in both Alvotech and Evoke 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 Alvotech and Evoke Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alvotech and Evoke Pharma, you can compare the effects of market volatilities on Alvotech and Evoke 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 Alvotech with a short position of Evoke Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and Evoke Pharma.

Diversification Opportunities for Alvotech and Evoke Pharma

0.05

Correlation Coefficient

Alvotech  Evoke Pharma

Significant diversification

The 3 months correlation between Alvotech and Evoke is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Evoke Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evoke Pharma and Alvotech 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 Alvotech are associated (or correlated) with Evoke Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evoke Pharma has no effect on the direction of Alvotech i.e., Alvotech and Evoke Pharma go up and down completely randomly.

Pair Corralation between Alvotech and Evoke Pharma

Given the investment horizon of 90 days Alvotech is expected to under-perform the Evoke Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Alvotech is 2.53 times less risky than Evoke Pharma. The stock trades about -0.01 of its potential returns per unit of risk. The Evoke Pharma is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  435.00  in Evoke Pharma on December 2, 2024 and sell it today you would earn a total of  31.00  from holding Evoke Pharma or generate 7.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alvotech  vs.  Evoke Pharma

Alvotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alvotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Alvotech is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Evoke Pharma

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evoke Pharma are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Evoke Pharma disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alvotech and Evoke Pharma

The main advantage of trading using opposite Alvotech and Evoke Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech position performs unexpectedly, Evoke 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 Evoke Pharma will offset losses from the drop in Evoke Pharma's long position.

The idea behind Alvotech and Evoke Pharma pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.