Correlation Between Gaming and Eisai

Can any of the company-specific risk be diversified away by investing in both Gaming 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 Gaming and Eisai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gaming and Leisure and Eisai Co, you can compare the effects of market volatilities on Gaming 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 Gaming with a short position of Eisai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming and Eisai.

Diversification Opportunities for Gaming and Eisai

-0.21

Correlation Coefficient

Gaming  Eisai

Very good diversification

The 3 months correlation between Gaming and Eisai is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gaming and Leisure and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai and Gaming 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 Gaming and Leisure 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 Gaming i.e., Gaming and Eisai go up and down completely randomly.

Pair Corralation between Gaming and Eisai

Assuming the 90 days horizon Gaming and Leisure is expected to generate 0.63 times more return on investment than Eisai. However, Gaming and Leisure is 1.58 times less risky than Eisai. It trades about -0.13 of its potential returns per unit of risk. Eisai Co is currently generating about -0.1 per unit of risk. If you would invest  4,757  in Gaming and Leisure on October 8, 2024 and sell it today you would lose (131.00) from holding Gaming and Leisure or give up 2.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gaming and Leisure  vs.  Eisai Co

Gaming and Leisure

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming and Leisure are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gaming is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Eisai

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eisai Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gaming and Eisai

The main advantage of trading using opposite Gaming and Eisai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming 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.

The idea behind Gaming and Leisure and Eisai Co 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.

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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.