Correlation Between Evoke Pharma and Petros Pharmaceuticals

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

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

Diversification Opportunities for Evoke Pharma and Petros Pharmaceuticals

0.24

Correlation Coefficient

Evoke Pharma  Petros Pharmaceuticals

Modest diversification

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

Pair Corralation between Evoke Pharma and Petros Pharmaceuticals

Given the investment horizon of 90 days Evoke Pharma is expected to under-perform the Petros Pharmaceuticals. In addition to that, Evoke Pharma is 1.46 times more volatile than Petros Pharmaceuticals. It trades about -0.4 of its total potential returns per unit of risk. Petros Pharmaceuticals is currently generating about -0.39 per unit of volatility. If you would invest  40.00  in Petros Pharmaceuticals on August 28, 2024 and sell it today you would lose (11.00) from holding Petros Pharmaceuticals or give up 27.5% of portfolio value over 90 days.

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

Evoke Pharma  vs.  Petros Pharmaceuticals

Evoke Pharma

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evoke Pharma are ranked lower than 2 (%) 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 December 2024.

Petros Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petros Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Evoke Pharma and Petros Pharmaceuticals

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

The idea behind Evoke Pharma and Petros Pharmaceuticals 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.