Correlation Between Implenia and Evolva Holding

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

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

Diversification Opportunities for Implenia and Evolva Holding

-0.26

Correlation Coefficient

Implenia  Evolva Holding

Very good diversification

The 3 months correlation between Implenia and Evolva is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Implenia AG 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 Implenia 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 Implenia AG 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 Implenia i.e., Implenia and Evolva Holding go up and down completely randomly.

Pair Corralation between Implenia and Evolva Holding

Assuming the 90 days trading horizon Implenia AG is expected to under-perform the Evolva Holding. But the stock apears to be less risky and, when comparing its historical volatility, Implenia AG is 4.12 times less risky than Evolva Holding. The stock trades about -0.04 of its potential returns per unit of risk. The Evolva Holding SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  83.00  in Evolva Holding SA on September 24, 2024 and sell it today you would lose (1.00) from holding Evolva Holding SA or give up 1.2% of portfolio value over 90 days.

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

Implenia AG  vs.  Evolva Holding SA

Implenia AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Evolva Holding SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolva Holding SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Evolva Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Implenia and Evolva Holding

The main advantage of trading using opposite Implenia and Evolva Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Implenia 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 Implenia AG 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..