Correlation Between Zevra Therapeutics and Scopus Biopharma

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

By analyzing existing cross correlation between Zevra Therapeutics and Scopus Biopharma, you can compare the effects of market volatilities on Zevra Therapeutics and Scopus Biopharma 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 Zevra Therapeutics with a short position of Scopus Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zevra Therapeutics and Scopus Biopharma.

Diversification Opportunities for Zevra Therapeutics and Scopus Biopharma

-0.41

Correlation Coefficient

Zevra Therapeutics  Scopus Biopharma

Very good diversification

The 3 months correlation between Zevra and Scopus is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Zevra Therapeutics and Scopus Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scopus Biopharma and Zevra Therapeutics 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 Zevra Therapeutics are associated (or correlated) with Scopus Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scopus Biopharma has no effect on the direction of Zevra Therapeutics i.e., Zevra Therapeutics and Scopus Biopharma go up and down completely randomly.

Pair Corralation between Zevra Therapeutics and Scopus Biopharma

Given the investment horizon of 90 days Zevra Therapeutics is expected to generate 1.67 times less return on investment than Scopus Biopharma. But when comparing it to its historical volatility, Zevra Therapeutics is 5.58 times less risky than Scopus Biopharma. It trades about 0.06 of its potential returns per unit of risk. Scopus Biopharma is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Scopus Biopharma on September 1, 2024 and sell it today you would lose (14.00) from holding Scopus Biopharma or give up 58.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	8.08%
Values	Daily Returns

Zevra Therapeutics  vs.  Scopus Biopharma

Zevra Therapeutics

Risk-Adjusted Performance

10 of 100

OK

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

Scopus Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scopus Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Scopus Biopharma is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Zevra Therapeutics and Scopus Biopharma

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

The idea behind Zevra Therapeutics and Scopus Biopharma 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.