Correlation Between Casio Computer and Eli Lilly

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

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

Diversification Opportunities for Casio Computer and Eli Lilly

0.06

Correlation Coefficient

Casio Computer  Eli Lilly

Significant diversification

The 3 months correlation between Casio and Eli is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and Casio Computer 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 Casio Computer CoLtd 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 Casio Computer i.e., Casio Computer and Eli Lilly go up and down completely randomly.

Pair Corralation between Casio Computer and Eli Lilly

Assuming the 90 days trading horizon Casio Computer CoLtd is expected to generate 0.84 times more return on investment than Eli Lilly. However, Casio Computer CoLtd is 1.19 times less risky than Eli Lilly. It trades about 0.24 of its potential returns per unit of risk. Eli Lilly and is currently generating about -0.02 per unit of risk. If you would invest  655.00  in Casio Computer CoLtd on October 10, 2024 and sell it today you would earn a total of  116.00  from holding Casio Computer CoLtd or generate 17.71% return on investment over 90 days.

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

Casio Computer CoLtd  vs.  Eli Lilly and

Casio Computer CoLtd

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, Casio Computer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Eli Lilly

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eli Lilly and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Casio Computer and Eli Lilly

The main advantage of trading using opposite Casio Computer and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casio Computer 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 Casio Computer CoLtd 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.