Correlation Between Evolus and NuCana PLC

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

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

Diversification Opportunities for Evolus and NuCana PLC

0.78

Correlation Coefficient

Evolus  NuCana PLC

Poor diversification

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

Pair Corralation between Evolus and NuCana PLC

Given the investment horizon of 90 days Evolus Inc is expected to generate 0.35 times more return on investment than NuCana PLC. However, Evolus Inc is 2.9 times less risky than NuCana PLC. It trades about -0.03 of its potential returns per unit of risk. NuCana PLC is currently generating about -0.18 per unit of risk. If you would invest  1,352  in Evolus Inc on February 16, 2024 and sell it today you would lose (75.00) from holding Evolus Inc or give up 5.55% of portfolio value over 90 days.

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

Evolus Inc  vs.  NuCana PLC

Evolus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

NuCana PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NuCana PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Evolus and NuCana PLC

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

The idea behind Evolus Inc and NuCana PLC 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.