Correlation Between Equillium and Evotec SE

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

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

Diversification Opportunities for Equillium and Evotec SE

-0.24

Correlation Coefficient

Equillium  Evotec SE

Very good diversification

The 3 months correlation between Equillium and Evotec is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Evotec SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec SE ADR and Equillium 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 Equillium are associated (or correlated) with Evotec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evotec SE ADR has no effect on the direction of Equillium i.e., Equillium and Evotec SE go up and down completely randomly.

Pair Corralation between Equillium and Evotec SE

Allowing for the 90-day total investment horizon Equillium is expected to generate 2.76 times more return on investment than Evotec SE. However, Equillium is 2.76 times more volatile than Evotec SE ADR. It trades about 0.13 of its potential returns per unit of risk. Evotec SE ADR is currently generating about 0.01 per unit of risk. If you would invest  37.00  in Equillium on May 6, 2025 and sell it today you would earn a total of  34.00  from holding Equillium or generate 91.89% return on investment over 90 days.

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

Equillium  vs.  Evotec SE ADR

Equillium

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Equillium reported solid returns over the last few months and may actually be approaching a breakup point.

Evotec SE ADR

Risk-Adjusted Performance

Weak

Over the last 90 days Evotec SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Evotec SE is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Equillium and Evotec SE

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

The idea behind Equillium and Evotec SE ADR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.