Correlation Between Laureate Education and Eisai
Can any of the company-specific risk be diversified away by investing in both Laureate Education 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 Laureate Education and Eisai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and Eisai Co, you can compare the effects of market volatilities on Laureate Education 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 Laureate Education with a short position of Eisai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and Eisai.
Diversification Opportunities for Laureate Education and Eisai
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Laureate and Eisai is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai and Laureate Education 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 Laureate Education 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 Laureate Education i.e., Laureate Education and Eisai go up and down completely randomly.
Pair Corralation between Laureate Education and Eisai
Assuming the 90 days trading horizon Laureate Education is expected to generate 2.51 times less return on investment than Eisai. But when comparing it to its historical volatility, Laureate Education is 1.55 times less risky than Eisai. It trades about 0.1 of its potential returns per unit of risk. Eisai Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,656 in Eisai Co on November 5, 2024 and sell it today you would earn a total of 194.00 from holding Eisai Co or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laureate Education vs. Eisai Co
Performance |
| Timeline |
| Laureate Education |
| Eisai |
Laureate Education and Eisai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and Eisai
The main advantage of trading using opposite Laureate Education and Eisai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education 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.| Laureate Education vs. Corporate Office Properties | Laureate Education vs. Perseus Mining Limited | Laureate Education vs. Titan Machinery | Laureate Education vs. Stag Industrial |
| Eisai vs. EMBARK EDUCATION LTD | Eisai vs. DeVry Education Group | Eisai vs. Perdoceo Education | Eisai vs. MAVEN WIRELESS SWEDEN |
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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