Correlation Between Eisai and CGX Energy
Can any of the company-specific risk be diversified away by investing in both Eisai and CGX Energy 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 CGX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eisai Co and CGX Energy, you can compare the effects of market volatilities on Eisai and CGX Energy 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 CGX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eisai and CGX Energy.
Diversification Opportunities for Eisai and CGX Energy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eisai and CGX is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Eisai Co and CGX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGX Energy 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 CGX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGX Energy has no effect on the direction of Eisai i.e., Eisai and CGX Energy go up and down completely randomly.
Pair Corralation between Eisai and CGX Energy
Assuming the 90 days horizon Eisai Co is expected to generate 0.32 times more return on investment than CGX Energy. However, Eisai Co is 3.13 times less risky than CGX Energy. It trades about -0.1 of its potential returns per unit of risk. CGX Energy is currently generating about -0.11 per unit of risk. If you would invest 3,000 in Eisai Co on September 18, 2024 and sell it today you would lose (150.00) from holding Eisai Co or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Eisai Co vs. CGX Energy
Performance |
| Timeline |
| Eisai |
| CGX Energy |
Eisai and CGX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eisai and CGX Energy
The main advantage of trading using opposite Eisai and CGX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eisai position performs unexpectedly, CGX Energy 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 CGX Energy will offset losses from the drop in CGX Energy's long position.The idea behind Eisai Co and CGX Energy 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.| CGX Energy vs. POSCO Holdings | CGX Energy vs. Schweizerische Nationalbank | CGX Energy vs. Berkshire Hathaway | CGX Energy vs. Berkshire Hathaway |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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