Correlation Between Evolent Health and Cogstate

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

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

Diversification Opportunities for Evolent Health and Cogstate

-0.48

Correlation Coefficient

Evolent Health  Cogstate

Very good diversification

The 3 months correlation between Evolent and Cogstate is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and Cogstate Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogstate Limited and Evolent Health 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 Evolent Health are associated (or correlated) with Cogstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogstate Limited has no effect on the direction of Evolent Health i.e., Evolent Health and Cogstate go up and down completely randomly.

Pair Corralation between Evolent Health and Cogstate

Considering the 90-day investment horizon Evolent Health is expected to under-perform the Cogstate. In addition to that, Evolent Health is 1.27 times more volatile than Cogstate Limited. It trades about -0.06 of its total potential returns per unit of risk. Cogstate Limited is currently generating about 0.17 per unit of volatility. If you would invest  68.00  in Cogstate Limited on December 27, 2024 and sell it today you would earn a total of  21.00  from holding Cogstate Limited or generate 30.88% return on investment over 90 days.

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

Evolent Health  vs.  Cogstate Limited

Evolent Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolent Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Cogstate Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cogstate Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Cogstate reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolent Health and Cogstate

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

The idea behind Evolent Health and Cogstate Limited 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.