Correlation Between Eisai Co and Mc Endvrs

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

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

Diversification Opportunities for Eisai Co and Mc Endvrs

0.25

Correlation Coefficient

Eisai Co  Mc Endvrs

Modest diversification

The 3 months correlation between Eisai and MSMY is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Eisai Co and Mc Endvrs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mc Endvrs and Eisai Co 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 Eisai Co are associated (or correlated) with Mc Endvrs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mc Endvrs has no effect on the direction of Eisai Co i.e., Eisai Co and Mc Endvrs go up and down completely randomly.

Pair Corralation between Eisai Co and Mc Endvrs

Assuming the 90 days horizon Eisai Co is expected to generate 1.16 times less return on investment than Mc Endvrs. But when comparing it to its historical volatility, Eisai Co is 2.97 times less risky than Mc Endvrs. It trades about 0.08 of its potential returns per unit of risk. Mc Endvrs is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.09  in Mc Endvrs on December 27, 2024 and sell it today you would lose (0.02) from holding Mc Endvrs or give up 22.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Eisai Co  vs.  Mc Endvrs

Eisai Co

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eisai Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Eisai Co reported solid returns over the last few months and may actually be approaching a breakup point.

Mc Endvrs

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mc Endvrs are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, Mc Endvrs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eisai Co and Mc Endvrs

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

The idea behind Eisai Co and Mc Endvrs 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.