Correlation Between DevEx Resources and Eli Lilly

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

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

Diversification Opportunities for DevEx Resources and Eli Lilly

-0.56

Correlation Coefficient

DevEx Resources  Eli Lilly

Excellent diversification

The 3 months correlation between DevEx and Eli is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding DevEx Resources Limited and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and DevEx Resources 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 DevEx Resources Limited 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 DevEx Resources i.e., DevEx Resources and Eli Lilly go up and down completely randomly.

Pair Corralation between DevEx Resources and Eli Lilly

Assuming the 90 days horizon DevEx Resources Limited is expected to generate 4.67 times more return on investment than Eli Lilly. However, DevEx Resources is 4.67 times more volatile than Eli Lilly and. It trades about 0.04 of its potential returns per unit of risk. Eli Lilly and is currently generating about 0.04 per unit of risk. If you would invest  5.95  in DevEx Resources Limited on December 19, 2024 and sell it today you would lose (0.35) from holding DevEx Resources Limited or give up 5.88% of portfolio value over 90 days.

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

DevEx Resources Limited  vs.  Eli Lilly and

DevEx Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DevEx Resources Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DevEx Resources reported solid returns over the last few months and may actually be approaching a breakup point.

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 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eli Lilly is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with DevEx Resources and Eli Lilly

The main advantage of trading using opposite DevEx Resources and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DevEx Resources 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 DevEx Resources Limited 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 CEOs Directory module to screen CEOs from public companies around the world.