Correlation Between Evolva Holding and Xlife Sciences

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

By analyzing existing cross correlation between Evolva Holding SA and Xlife Sciences AG, you can compare the effects of market volatilities on Evolva Holding and Xlife Sciences 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 Evolva Holding with a short position of Xlife Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolva Holding and Xlife Sciences.

Diversification Opportunities for Evolva Holding and Xlife Sciences

-0.32

Correlation Coefficient

Evolva Holding  Xlife Sciences

Very good diversification

The 3 months correlation between Evolva and Xlife is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Evolva Holding SA and Xlife Sciences AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xlife Sciences AG and Evolva Holding 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 Evolva Holding SA are associated (or correlated) with Xlife Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xlife Sciences AG has no effect on the direction of Evolva Holding i.e., Evolva Holding and Xlife Sciences go up and down completely randomly.

Pair Corralation between Evolva Holding and Xlife Sciences

Assuming the 90 days trading horizon Evolva Holding SA is expected to generate 1.51 times more return on investment than Xlife Sciences. However, Evolva Holding is 1.51 times more volatile than Xlife Sciences AG. It trades about 0.13 of its potential returns per unit of risk. Xlife Sciences AG is currently generating about -0.01 per unit of risk. If you would invest  90.00  in Evolva Holding SA on December 29, 2024 and sell it today you would earn a total of  45.00  from holding Evolva Holding SA or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Evolva Holding SA  vs.  Xlife Sciences AG

Evolva Holding SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolva Holding SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Evolva Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Xlife Sciences AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xlife Sciences AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Xlife Sciences is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Evolva Holding and Xlife Sciences

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

The idea behind Evolva Holding SA and Xlife Sciences AG 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.