Correlation Between Evoke Pharma and Alvotech

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

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

Diversification Opportunities for Evoke Pharma and Alvotech

0.05

Correlation Coefficient

Evoke Pharma  Alvotech

Significant diversification

The 3 months correlation between Evoke and Alvotech is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Evoke Pharma and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Evoke Pharma 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 Evoke Pharma are associated (or correlated) with Alvotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvotech has no effect on the direction of Evoke Pharma i.e., Evoke Pharma and Alvotech go up and down completely randomly.

Pair Corralation between Evoke Pharma and Alvotech

Given the investment horizon of 90 days Evoke Pharma is expected to under-perform the Alvotech. In addition to that, Evoke Pharma is 1.91 times more volatile than Alvotech. It trades about -0.05 of its total potential returns per unit of risk. Alvotech is currently generating about 0.0 per unit of volatility. If you would invest  1,350  in Alvotech on December 3, 2024 and sell it today you would lose (214.00) from holding Alvotech or give up 15.85% of portfolio value over 90 days.

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

Evoke Pharma  vs.  Alvotech

Evoke Pharma

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evoke Pharma are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Evoke Pharma disclosed solid returns over the last few months and may actually be approaching a breakup point.

Alvotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alvotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Alvotech is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Evoke Pharma and Alvotech

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

The idea behind Evoke Pharma and Alvotech 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.