Correlation Between Eli Lilly and CSPC Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Eli Lilly and CSPC Pharmaceutical 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 Eli Lilly and CSPC Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eli Lilly and and CSPC Pharmaceutical Group, you can compare the effects of market volatilities on Eli Lilly and CSPC Pharmaceutical 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 Eli Lilly with a short position of CSPC Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and CSPC Pharmaceutical.
Diversification Opportunities for Eli Lilly and CSPC Pharmaceutical
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eli and CSPC is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and CSPC Pharmaceutical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSPC Pharmaceutical and Eli Lilly 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 Eli Lilly and are associated (or correlated) with CSPC Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSPC Pharmaceutical has no effect on the direction of Eli Lilly i.e., Eli Lilly and CSPC Pharmaceutical go up and down completely randomly.
Pair Corralation between Eli Lilly and CSPC Pharmaceutical
Considering the 90-day investment horizon Eli Lilly and is expected to generate 0.65 times more return on investment than CSPC Pharmaceutical. However, Eli Lilly and is 1.53 times less risky than CSPC Pharmaceutical. It trades about -0.21 of its potential returns per unit of risk. CSPC Pharmaceutical Group is currently generating about -0.18 per unit of risk. If you would invest 90,209 in Eli Lilly and on August 30, 2024 and sell it today you would lose (11,390) from holding Eli Lilly and or give up 12.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eli Lilly and vs. CSPC Pharmaceutical Group
Performance |
| Timeline |
| Eli Lilly |
| CSPC Pharmaceutical |
Eli Lilly and CSPC Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eli Lilly and CSPC Pharmaceutical
The main advantage of trading using opposite Eli Lilly and CSPC Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, CSPC Pharmaceutical 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 CSPC Pharmaceutical will offset losses from the drop in CSPC Pharmaceutical's long position.| Eli Lilly vs. Johnson Johnson | Eli Lilly vs. Bristol Myers Squibb | Eli Lilly vs. AbbVie Inc | Eli Lilly vs. Pfizer Inc |
| CSPC Pharmaceutical vs. Ono Pharmaceutical Co | CSPC Pharmaceutical vs. Grifols SA ADR | CSPC Pharmaceutical vs. Pfizer Inc | CSPC Pharmaceutical vs. Northann Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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