Correlation Between Evolus and Biofrontera

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

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

Diversification Opportunities for Evolus and Biofrontera

-0.03

Correlation Coefficient

Evolus  Biofrontera

Good diversification

The 3 months correlation between Evolus and Biofrontera is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Evolus Inc and Biofrontera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera and Evolus 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 Evolus Inc are associated (or correlated) with Biofrontera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofrontera has no effect on the direction of Evolus i.e., Evolus and Biofrontera go up and down completely randomly.

Pair Corralation between Evolus and Biofrontera

Given the investment horizon of 90 days Evolus is expected to generate 2.29 times less return on investment than Biofrontera. But when comparing it to its historical volatility, Evolus Inc is 1.1 times less risky than Biofrontera. It trades about 0.08 of its potential returns per unit of risk. Biofrontera is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  78.00  in Biofrontera on November 20, 2024 and sell it today you would earn a total of  40.00  from holding Biofrontera or generate 51.28% return on investment over 90 days.

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

Evolus Inc  vs.  Biofrontera

Evolus Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolus Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting essential indicators, Evolus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Biofrontera

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Biofrontera are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Biofrontera demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolus and Biofrontera

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

The idea behind Evolus Inc and Biofrontera 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .