Correlation Between Evoke Pharma and Evolus

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Can any of the company-specific risk be diversified away by investing in both Evoke Pharma and Evolus 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 Evoke Pharma and Evolus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evoke Pharma and Evolus Inc, you can compare the effects of market volatilities on Evoke Pharma and Evolus 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 Evoke Pharma with a short position of Evolus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evoke Pharma and Evolus.

Diversification Opportunities for Evoke Pharma and Evolus

-0.82
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Evoke and Evolus is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Evoke Pharma and Evolus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolus Inc and Evoke Pharma 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 Evoke Pharma are associated (or correlated) with Evolus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolus Inc has no effect on the direction of Evoke Pharma i.e., Evoke Pharma and Evolus go up and down completely randomly.

Pair Corralation between Evoke Pharma and Evolus

Given the investment horizon of 90 days Evoke Pharma is expected to under-perform the Evolus. In addition to that, Evoke Pharma is 2.21 times more volatile than Evolus Inc. It trades about -0.01 of its total potential returns per unit of risk. Evolus Inc is currently generating about 0.03 per unit of volatility. If you would invest  1,124  in Evolus Inc on December 29, 2023 and sell it today you would earn a total of  276.00  from holding Evolus Inc or generate 24.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Evoke Pharma  vs.  Evolus Inc

 Performance 
       Timeline  
Evoke Pharma 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Evoke Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Evolus Inc 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Evolus Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Evolus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Evoke Pharma and Evolus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Evoke Pharma and Evolus

The main advantage of trading using opposite Evoke Pharma and Evolus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evoke Pharma position performs unexpectedly, Evolus 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 Evolus will offset losses from the drop in Evolus' long position.
The idea behind Evoke Pharma and Evolus Inc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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