Correlation Between Apple and Eisai
Can any of the company-specific risk be diversified away by investing in both Apple and Eisai 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 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 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Eisai.
Diversification Opportunities for Apple and Eisai
Excellent diversification
The 3 months correlation between Apple and Eisai is -0.62. 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 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eisai has no effect on the direction of Apple i.e., Apple and Eisai go up and down completely randomly.
Pair Corralation between Apple and Eisai
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Eisai. In addition to that, Apple is 1.13 times more volatile than Eisai Co. It trades about -0.09 of its total potential returns per unit of risk. Eisai Co is currently generating about 0.23 per unit of volatility. If you would invest 680.00 in Eisai Co on November 9, 2024 and sell it today you would earn a total of 57.00 from holding Eisai Co or generate 8.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Eisai Co
Performance |
| Timeline |
| Apple Inc |
| Eisai |
Apple and Eisai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Eisai
The main advantage of trading using opposite Apple and Eisai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Eisai 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 will offset losses from the drop in Eisai'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 vs. Allient | Eisai vs. Integrated Media Technology | Eisai vs. Everspin Technologies | Eisai vs. 51Talk Online Education |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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