Correlation Between COSMO Pharmaceuticals and Evolva Holding

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

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

Diversification Opportunities for COSMO Pharmaceuticals and Evolva Holding

-0.16

Correlation Coefficient

COSMO Pharmaceuticals  Evolva Holding

Good diversification

The 3 months correlation between COSMO and Evolva is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding COSMO Pharmaceuticals SA and Evolva Holding SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolva Holding SA and COSMO Pharmaceuticals 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 COSMO Pharmaceuticals SA are associated (or correlated) with Evolva Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolva Holding SA has no effect on the direction of COSMO Pharmaceuticals i.e., COSMO Pharmaceuticals and Evolva Holding go up and down completely randomly.

Pair Corralation between COSMO Pharmaceuticals and Evolva Holding

Assuming the 90 days trading horizon COSMO Pharmaceuticals SA is expected to under-perform the Evolva Holding. But the stock apears to be less risky and, when comparing its historical volatility, COSMO Pharmaceuticals SA is 5.42 times less risky than Evolva Holding. The stock trades about -0.1 of its potential returns per unit of risk. The Evolva Holding SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  85.00  in Evolva Holding SA on September 27, 2024 and sell it today you would lose (3.00) from holding Evolva Holding SA or give up 3.53% of portfolio value over 90 days.

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

COSMO Pharmaceuticals SA  vs.  Evolva Holding SA

COSMO Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COSMO Pharmaceuticals SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Evolva Holding SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolva Holding SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Evolva Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with COSMO Pharmaceuticals and Evolva Holding

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

The idea behind COSMO Pharmaceuticals SA and Evolva Holding SA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.