Correlation Between Evotec SE and Intracellular

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

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

Diversification Opportunities for Evotec SE and Intracellular

-0.46

Correlation Coefficient

Evotec SE  Intracellular

Very good diversification

The 3 months correlation between Evotec and Intracellular is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Evotec SE ADR and Intracellular Th in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intracellular Th and Evotec SE 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 Evotec SE ADR are associated (or correlated) with Intracellular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intracellular Th has no effect on the direction of Evotec SE i.e., Evotec SE and Intracellular go up and down completely randomly.

Pair Corralation between Evotec SE and Intracellular

Considering the 90-day investment horizon Evotec SE ADR is expected to under-perform the Intracellular. But the stock apears to be less risky and, when comparing its historical volatility, Evotec SE ADR is 1.61 times less risky than Intracellular. The stock trades about -0.13 of its potential returns per unit of risk. The Intracellular Th is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  8,348  in Intracellular Th on December 30, 2024 and sell it today you would earn a total of  4,833  from holding Intracellular Th or generate 57.89% return on investment over 90 days.

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

Evotec SE ADR  vs.  Intracellular Th

Evotec SE ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evotec SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Intracellular Th

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intracellular Th are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Intracellular demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evotec SE and Intracellular

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

The idea behind Evotec SE ADR and Intracellular Th 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.