Correlation Between Aptorum Group and Evotec SE

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

By analyzing existing cross correlation between Aptorum Group Ltd and Evotec SE ADR, you can compare the effects of market volatilities on Aptorum Group and Evotec SE 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 Aptorum Group with a short position of Evotec SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptorum Group and Evotec SE.

Diversification Opportunities for Aptorum Group and Evotec SE

-0.78

Correlation Coefficient

Aptorum Group  Evotec SE

Pay attention - limited upside

The 3 months correlation between Aptorum and Evotec is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Aptorum Group Ltd and Evotec SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec SE ADR and Aptorum Group 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 Aptorum Group Ltd are associated (or correlated) with Evotec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evotec SE ADR has no effect on the direction of Aptorum Group i.e., Aptorum Group and Evotec SE go up and down completely randomly.

Pair Corralation between Aptorum Group and Evotec SE

Considering the 90-day investment horizon Aptorum Group Ltd is expected to generate 2.84 times more return on investment than Evotec SE. However, Aptorum Group is 2.84 times more volatile than Evotec SE ADR. It trades about 0.08 of its potential returns per unit of risk. Evotec SE ADR is currently generating about 0.11 per unit of risk. If you would invest  177.00  in Aptorum Group Ltd on October 5, 2024 and sell it today you would earn a total of  31.00  from holding Aptorum Group Ltd or generate 17.51% return on investment over 90 days.

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

Aptorum Group Ltd  vs.  Evotec SE ADR

Aptorum Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aptorum Group Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aptorum Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Evotec SE ADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evotec SE ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Evotec SE displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptorum Group and Evotec SE

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

The idea behind Aptorum Group Ltd and Evotec SE ADR 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.