Correlation Between Compugen and Evogene

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

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

Diversification Opportunities for Compugen and Evogene

0.47

Correlation Coefficient

Compugen  Evogene

Very weak diversification

The 3 months correlation between Compugen and Evogene is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Compugen and Evogene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evogene and Compugen 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 Compugen are associated (or correlated) with Evogene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evogene has no effect on the direction of Compugen i.e., Compugen and Evogene go up and down completely randomly.

Pair Corralation between Compugen and Evogene

Assuming the 90 days trading horizon Compugen is expected to generate 0.69 times more return on investment than Evogene. However, Compugen is 1.46 times less risky than Evogene. It trades about -0.15 of its potential returns per unit of risk. Evogene is currently generating about -0.28 per unit of risk. If you would invest  75,900  in Compugen on September 2, 2024 and sell it today you would lose (17,800) from holding Compugen or give up 23.45% of portfolio value over 90 days.

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

Compugen  vs.  Evogene

Compugen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compugen 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 somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Evogene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evogene 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 somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Compugen and Evogene

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

The idea behind Compugen and Evogene 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.