Correlation Between Apple and Eisai Co
Can any of the company-specific risk be diversified away by investing in both Apple and Eisai Co 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 Apple and Eisai Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Eisai Co, you can compare the effects of market volatilities on Apple and Eisai Co 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 Apple with a short position of Eisai Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Eisai Co.
Diversification Opportunities for Apple and Eisai Co
Excellent diversification
The 3 months correlation between Apple and Eisai is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai Co and Apple 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 Apple Inc are associated (or correlated) with Eisai Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eisai Co has no effect on the direction of Apple i.e., Apple and Eisai Co go up and down completely randomly.
Pair Corralation between Apple and Eisai Co
Given the investment horizon of 90 days Apple Inc is expected to generate 0.71 times more return on investment than Eisai Co. However, Apple Inc is 1.4 times less risky than Eisai Co. It trades about 0.08 of its potential returns per unit of risk. Eisai Co is currently generating about -0.1 per unit of risk. If you would invest 17,812 in Apple Inc on September 1, 2024 and sell it today you would earn a total of 5,921 from holding Apple Inc or generate 33.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Eisai Co
Performance |
| Timeline |
| Apple Inc |
| Eisai Co |
Apple and Eisai Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Eisai Co
The main advantage of trading using opposite Apple and Eisai Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Eisai Co 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 Eisai Co will offset losses from the drop in Eisai Co's long position.The idea behind Apple Inc and Eisai Co 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.| Eisai Co vs. BBB Foods | Eisai Co vs. Fidus Investment Corp | Eisai Co vs. Crombie Real Estate | Eisai Co vs. Cedar Realty Trust |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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