Correlation Between Evotec SE and Agricultural Bank

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

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

Diversification Opportunities for Evotec SE and Agricultural Bank

-0.01

Correlation Coefficient

Evotec SE  Agricultural Bank

Good diversification

The 3 months correlation between Evotec and Agricultural is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Evotec SE and Agricultural Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agricultural Bank 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 Agricultural Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agricultural Bank has no effect on the direction of Evotec SE i.e., Evotec SE and Agricultural Bank go up and down completely randomly.

Pair Corralation between Evotec SE and Agricultural Bank

Assuming the 90 days trading horizon Evotec SE is expected to generate 1.14 times less return on investment than Agricultural Bank. In addition to that, Evotec SE is 1.09 times more volatile than Agricultural Bank of. It trades about 0.12 of its total potential returns per unit of risk. Agricultural Bank of is currently generating about 0.14 per unit of volatility. If you would invest  34.00  in Agricultural Bank of on October 21, 2024 and sell it today you would earn a total of  17.00  from holding Agricultural Bank of or generate 50.0% return on investment over 90 days.

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

Evotec SE  vs.  Agricultural Bank of

Evotec SE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evotec SE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Evotec SE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Agricultural Bank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agricultural Bank of are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Agricultural Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evotec SE and Agricultural Bank

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

The idea behind Evotec SE and Agricultural Bank of 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.