Correlation Between 23Andme Holding and Evotec SE

Can any of the company-specific risk be diversified away by investing in both 23Andme Holding and Evotec SE 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 23Andme Holding and Evotec SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 23Andme Holding Co and Evotec SE ADR, you can compare the effects of market volatilities on 23Andme Holding and Evotec SE 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 23Andme Holding with a short position of Evotec SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of 23Andme Holding and Evotec SE.

Diversification Opportunities for 23Andme Holding and Evotec SE

-0.78

Correlation Coefficient

23Andme Holding  Evotec SE

Pay attention - limited upside

The 3 months correlation between 23Andme and Evotec is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding 23Andme Holding Co and Evotec SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec SE ADR and 23Andme Holding 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 23Andme Holding Co are associated (or correlated) with Evotec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evotec SE ADR has no effect on the direction of 23Andme Holding i.e., 23Andme Holding and Evotec SE go up and down completely randomly.

Pair Corralation between 23Andme Holding and Evotec SE

Allowing for the 90-day total investment horizon 23Andme Holding Co is expected to under-perform the Evotec SE. In addition to that, 23Andme Holding is 1.21 times more volatile than Evotec SE ADR. It trades about -0.09 of its total potential returns per unit of risk. Evotec SE ADR is currently generating about 0.13 per unit of volatility. If you would invest  330.00  in Evotec SE ADR on September 4, 2024 and sell it today you would earn a total of  142.00  from holding Evotec SE ADR or generate 43.03% return on investment over 90 days.

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

23Andme Holding Co  vs.  Evotec SE ADR

23Andme Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 23Andme Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Evotec SE ADR

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with 23Andme Holding and Evotec SE

The main advantage of trading using opposite 23Andme Holding and Evotec SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 23Andme Holding position performs unexpectedly, Evotec SE 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 Evotec SE will offset losses from the drop in Evotec SE's long position.

The idea behind 23Andme Holding Co and Evotec SE ADR 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.