Correlation Between Evoke Pharma and Amphastar

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

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

Diversification Opportunities for Evoke Pharma and Amphastar

0.62

Correlation Coefficient

Evoke Pharma  Amphastar

Poor diversification

The 3 months correlation between Evoke and Amphastar is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Evoke Pharma and Amphastar P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphastar P 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 Amphastar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphastar P has no effect on the direction of Evoke Pharma i.e., Evoke Pharma and Amphastar go up and down completely randomly.

Pair Corralation between Evoke Pharma and Amphastar

Given the investment horizon of 90 days Evoke Pharma is expected to generate 2.32 times more return on investment than Amphastar. However, Evoke Pharma is 2.32 times more volatile than Amphastar P. It trades about -0.01 of its potential returns per unit of risk. Amphastar P is currently generating about -0.02 per unit of risk. If you would invest  590.00  in Evoke Pharma on October 21, 2024 and sell it today you would lose (150.00) from holding Evoke Pharma or give up 25.42% of portfolio value over 90 days.

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

Evoke Pharma  vs.  Amphastar P

Evoke Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evoke Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Amphastar P

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Evoke Pharma and Amphastar

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

The idea behind Evoke Pharma and Amphastar P 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.