Correlation Between Eisai and Knowles
Can any of the company-specific risk be diversified away by investing in both Eisai and Knowles 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 Eisai and Knowles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eisai Co and Knowles, you can compare the effects of market volatilities on Eisai and Knowles 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 Eisai with a short position of Knowles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eisai and Knowles.
Diversification Opportunities for Eisai and Knowles
Pay attention - limited upside
The 3 months correlation between Eisai and Knowles is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Eisai Co and Knowles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles and Eisai 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 Eisai Co are associated (or correlated) with Knowles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowles has no effect on the direction of Eisai i.e., Eisai and Knowles go up and down completely randomly.
Pair Corralation between Eisai and Knowles
Assuming the 90 days horizon Eisai Co is expected to under-perform the Knowles. In addition to that, Eisai is 1.41 times more volatile than Knowles. It trades about -0.15 of its total potential returns per unit of risk. Knowles is currently generating about 0.17 per unit of volatility. If you would invest 1,510 in Knowles on September 12, 2024 and sell it today you would earn a total of 340.00 from holding Knowles or generate 22.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eisai Co vs. Knowles
Performance |
| Timeline |
| Eisai |
| Knowles |
Eisai and Knowles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eisai and Knowles
The main advantage of trading using opposite Eisai and Knowles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eisai position performs unexpectedly, Knowles 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 Knowles will offset losses from the drop in Knowles' long position.| Eisai vs. Entravision Communications | Eisai vs. MUTUIONLINE | Eisai vs. SALESFORCE INC CDR | Eisai vs. COMPUTERSHARE |
| Knowles vs. Singapore Telecommunications Limited | Knowles vs. SBA Communications Corp | Knowles vs. Corporate Travel Management | Knowles vs. Mobilezone Holding AG |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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