Correlation Between DAIDO METAL and Eli Lilly

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

By analyzing existing cross correlation between DAIDO METAL TD and Eli Lilly and, you can compare the effects of market volatilities on DAIDO METAL and Eli Lilly 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 DAIDO METAL with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIDO METAL and Eli Lilly.

Diversification Opportunities for DAIDO METAL and Eli Lilly

0.33

Correlation Coefficient

DAIDO METAL  Eli Lilly

Weak diversification

The 3 months correlation between DAIDO and Eli is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding DAIDO METAL TD and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and DAIDO METAL 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 DAIDO METAL TD are associated (or correlated) with Eli Lilly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eli Lilly has no effect on the direction of DAIDO METAL i.e., DAIDO METAL and Eli Lilly go up and down completely randomly.

Pair Corralation between DAIDO METAL and Eli Lilly

Assuming the 90 days horizon DAIDO METAL TD is expected to generate 0.69 times more return on investment than Eli Lilly. However, DAIDO METAL TD is 1.45 times less risky than Eli Lilly. It trades about 0.12 of its potential returns per unit of risk. Eli Lilly and is currently generating about 0.01 per unit of risk. If you would invest  276.00  in DAIDO METAL TD on December 20, 2024 and sell it today you would earn a total of  28.00  from holding DAIDO METAL TD or generate 10.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

DAIDO METAL TD  vs.  Eli Lilly and

DAIDO METAL TD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DAIDO METAL TD are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DAIDO METAL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Eli Lilly

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eli Lilly and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Eli Lilly is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DAIDO METAL and Eli Lilly

The main advantage of trading using opposite DAIDO METAL and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIDO METAL position performs unexpectedly, Eli Lilly 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 Eli Lilly will offset losses from the drop in Eli Lilly's long position.

The idea behind DAIDO METAL TD and Eli Lilly and 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.