Correlation Between CHINA TONTINE and Eli Lilly

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Can any of the company-specific risk be diversified away by investing in both CHINA TONTINE and Eli Lilly 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 CHINA TONTINE and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA TONTINE WINES and Eli Lilly and, you can compare the effects of market volatilities on CHINA TONTINE and Eli Lilly 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 CHINA TONTINE with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TONTINE and Eli Lilly.

Diversification Opportunities for CHINA TONTINE and Eli Lilly

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between CHINA and Eli is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TONTINE WINES and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and CHINA TONTINE 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 CHINA TONTINE WINES are associated (or correlated) with Eli Lilly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eli Lilly has no effect on the direction of CHINA TONTINE i.e., CHINA TONTINE and Eli Lilly go up and down completely randomly.

Pair Corralation between CHINA TONTINE and Eli Lilly

If you would invest  76,180  in Eli Lilly and on November 28, 2024 and sell it today you would earn a total of  9,490  from holding Eli Lilly and or generate 12.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

CHINA TONTINE WINES  vs.  Eli Lilly and

 Performance 
       Timeline  
CHINA TONTINE WINES 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days CHINA TONTINE WINES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, CHINA TONTINE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Eli Lilly 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Eli Lilly and are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Eli Lilly unveiled solid returns over the last few months and may actually be approaching a breakup point.

CHINA TONTINE and Eli Lilly Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CHINA TONTINE and Eli Lilly

The main advantage of trading using opposite CHINA TONTINE and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TONTINE position performs unexpectedly, Eli Lilly 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 Eli Lilly will offset losses from the drop in Eli Lilly's long position.
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The idea behind CHINA TONTINE WINES and Eli Lilly and 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.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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