Correlation Between Evotec SE and BEXIMCO PHARMAGDR

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

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

Diversification Opportunities for Evotec SE and BEXIMCO PHARMAGDR

0.73

Correlation Coefficient

Evotec SE  BEXIMCO PHARMAGDR

Poor diversification

The 3 months correlation between Evotec and BEXIMCO is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Evotec SE and BEXIMCO PHARMAGDR REGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEXIMCO PHARMAGDR REGS 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 BEXIMCO PHARMAGDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEXIMCO PHARMAGDR REGS has no effect on the direction of Evotec SE i.e., Evotec SE and BEXIMCO PHARMAGDR go up and down completely randomly.

Pair Corralation between Evotec SE and BEXIMCO PHARMAGDR

Assuming the 90 days trading horizon Evotec SE is expected to under-perform the BEXIMCO PHARMAGDR. But the stock apears to be less risky and, when comparing its historical volatility, Evotec SE is 1.13 times less risky than BEXIMCO PHARMAGDR. The stock trades about -0.02 of its potential returns per unit of risk. The BEXIMCO PHARMAGDR REGS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  45.00  in BEXIMCO PHARMAGDR REGS on September 26, 2024 and sell it today you would lose (4.00) from holding BEXIMCO PHARMAGDR REGS or give up 8.89% of portfolio value over 90 days.

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

Evotec SE  vs.  BEXIMCO PHARMAGDR REGS

Evotec SE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evotec SE are ranked lower than 8 (%) 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.

BEXIMCO PHARMAGDR REGS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BEXIMCO PHARMAGDR REGS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BEXIMCO PHARMAGDR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evotec SE and BEXIMCO PHARMAGDR

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

The idea behind Evotec SE and BEXIMCO PHARMAGDR REGS 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.