Correlation Between Evotec SE and Dalata Hotel

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

By analyzing existing cross correlation between Evotec SE and Dalata Hotel Group, you can compare the effects of market volatilities on Evotec SE and Dalata Hotel 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 Dalata Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evotec SE and Dalata Hotel.

Diversification Opportunities for Evotec SE and Dalata Hotel

0.81

Correlation Coefficient

Evotec SE  Dalata Hotel

Very poor diversification

The 3 months correlation between Evotec and Dalata is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Evotec SE and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group 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 are associated (or correlated) with Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of Evotec SE i.e., Evotec SE and Dalata Hotel go up and down completely randomly.

Pair Corralation between Evotec SE and Dalata Hotel

Assuming the 90 days trading horizon Evotec SE is expected to under-perform the Dalata Hotel. In addition to that, Evotec SE is 2.93 times more volatile than Dalata Hotel Group. It trades about -0.03 of its total potential returns per unit of risk. Dalata Hotel Group is currently generating about 0.03 per unit of volatility. If you would invest  431.00  in Dalata Hotel Group on October 9, 2024 and sell it today you would earn a total of  32.00  from holding Dalata Hotel Group or generate 7.42% return on investment over 90 days.

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

Evotec SE  vs.  Dalata Hotel Group

Evotec SE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evotec SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Evotec SE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dalata Hotel Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dalata Hotel Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dalata Hotel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evotec SE and Dalata Hotel

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

The idea behind Evotec SE and Dalata Hotel Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .