Correlation Between Eisai Co and Greater Cannabis
Can any of the company-specific risk be diversified away by investing in both Eisai Co and Greater Cannabis 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 Co and Greater Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eisai Co and Greater Cannabis, you can compare the effects of market volatilities on Eisai Co and Greater Cannabis 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 Co with a short position of Greater Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eisai Co and Greater Cannabis.
Diversification Opportunities for Eisai Co and Greater Cannabis
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eisai and Greater is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Eisai Co and Greater Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greater Cannabis and Eisai Co 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 Greater Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greater Cannabis has no effect on the direction of Eisai Co i.e., Eisai Co and Greater Cannabis go up and down completely randomly.
Pair Corralation between Eisai Co and Greater Cannabis
Assuming the 90 days horizon Eisai Co is expected to under-perform the Greater Cannabis. But the pink sheet apears to be less risky and, when comparing its historical volatility, Eisai Co is 4.38 times less risky than Greater Cannabis. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Greater Cannabis is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 0.05 in Greater Cannabis on August 29, 2024 and sell it today you would lose (0.01) from holding Greater Cannabis or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Eisai Co vs. Greater Cannabis
Performance |
| Timeline |
| Eisai Co |
| Greater Cannabis |
Eisai Co and Greater Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eisai Co and Greater Cannabis
The main advantage of trading using opposite Eisai Co and Greater Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eisai Co position performs unexpectedly, Greater Cannabis 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 Greater Cannabis will offset losses from the drop in Greater Cannabis' long position.| Eisai Co vs. US Lithium Corp | Eisai Co vs. Mc Endvrs | Eisai Co vs. Kali Inc | Eisai Co vs. One World Pharma |
| Greater Cannabis vs. Global Hemp Group | Greater Cannabis vs. Cannabis Suisse Corp | Greater Cannabis vs. Maple Leaf Green | Greater Cannabis vs. Mc Endvrs |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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