Correlation Between Evotec SE and Structure Therapeutics

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

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

Diversification Opportunities for Evotec SE and Structure Therapeutics

0.8

Correlation Coefficient

Evotec SE  Structure Therapeutics

Very poor diversification

The 3 months correlation between Evotec and Structure is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Evotec SE ADR and Structure Therapeutics America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Structure Therapeutics and Evotec SE 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 Evotec SE ADR are associated (or correlated) with Structure Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Structure Therapeutics has no effect on the direction of Evotec SE i.e., Evotec SE and Structure Therapeutics go up and down completely randomly.

Pair Corralation between Evotec SE and Structure Therapeutics

Considering the 90-day investment horizon Evotec SE ADR is expected to under-perform the Structure Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Evotec SE ADR is 1.4 times less risky than Structure Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Structure Therapeutics American is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,910  in Structure Therapeutics American on February 13, 2025 and sell it today you would lose (521.00) from holding Structure Therapeutics American or give up 17.9% of portfolio value over 90 days.

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

Evotec SE ADR  vs.  Structure Therapeutics America

Evotec SE ADR

Risk-Adjusted Performance

Very 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 recent stock price disarray, may contribute to short-term losses for the investors.

Structure Therapeutics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Structure Therapeutics American are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Structure Therapeutics may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Evotec SE and Structure Therapeutics

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

The idea behind Evotec SE ADR and Structure Therapeutics American 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.