Correlation Between Qilian International and Evoke Pharma

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

By analyzing existing cross correlation between Qilian International Holding and Evoke Pharma, you can compare the effects of market volatilities on Qilian International and Evoke Pharma 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 Qilian International with a short position of Evoke Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qilian International and Evoke Pharma.

Diversification Opportunities for Qilian International and Evoke Pharma

-0.06

Correlation Coefficient

Qilian International  Evoke Pharma

Good diversification

The 3 months correlation between Qilian and Evoke is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Qilian International Holding and Evoke Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evoke Pharma and Qilian International 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 Qilian International Holding are associated (or correlated) with Evoke Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evoke Pharma has no effect on the direction of Qilian International i.e., Qilian International and Evoke Pharma go up and down completely randomly.

Pair Corralation between Qilian International and Evoke Pharma

Considering the 90-day investment horizon Qilian International Holding is expected to generate 0.85 times more return on investment than Evoke Pharma. However, Qilian International Holding is 1.18 times less risky than Evoke Pharma. It trades about 0.1 of its potential returns per unit of risk. Evoke Pharma is currently generating about 0.02 per unit of risk. If you would invest  648.00  in Qilian International Holding on September 13, 2024 and sell it today you would earn a total of  201.00  from holding Qilian International Holding or generate 31.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Qilian International Holding  vs.  Evoke Pharma

Qilian International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qilian International Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Qilian International displayed solid returns over the last few months and may actually be approaching a breakup point.

Evoke Pharma

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evoke Pharma are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Evoke Pharma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Qilian International and Evoke Pharma

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

The idea behind Qilian International Holding and Evoke Pharma 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.