Correlation Between Global Hemp and Eisai
Can any of the company-specific risk be diversified away by investing in both Global Hemp 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 Global Hemp and Eisai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Hemp Group and Eisai Co, you can compare the effects of market volatilities on Global Hemp 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 Global Hemp with a short position of Eisai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Hemp and Eisai.
Diversification Opportunities for Global Hemp and Eisai
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and Eisai is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Global Hemp Group and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai and Global Hemp 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 Global Hemp Group 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 Global Hemp i.e., Global Hemp and Eisai go up and down completely randomly.
Pair Corralation between Global Hemp and Eisai
Assuming the 90 days horizon Global Hemp Group is expected to generate 18.09 times more return on investment than Eisai. However, Global Hemp is 18.09 times more volatile than Eisai Co. It trades about 0.12 of its potential returns per unit of risk. Eisai Co is currently generating about -0.03 per unit of risk. If you would invest 1.08 in Global Hemp Group on August 25, 2024 and sell it today you would earn a total of 0.42 from holding Global Hemp Group or generate 38.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.16% |
| Values | Daily Returns |
Global Hemp Group vs. Eisai Co
Performance |
| Timeline |
| Global Hemp Group |
| Eisai |
Global Hemp and Eisai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Hemp and Eisai
The main advantage of trading using opposite Global Hemp and Eisai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Hemp 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.| Global Hemp vs. Green Cures Botanical | Global Hemp vs. Galexxy Holdings | Global Hemp vs. Indoor Harvest Corp | Global Hemp vs. Speakeasy Cannabis Club |
| Eisai vs. Green Cures Botanical | Eisai vs. Galexxy Holdings | Eisai vs. Indoor Harvest Corp | Eisai vs. Speakeasy Cannabis Club |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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