Correlation Between Eisai and Mountain High

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

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

Diversification Opportunities for Eisai and Mountain High

0.0

Correlation Coefficient

Eisai  Mountain High

Pay attention - limited upside

The 3 months correlation between Eisai and Mountain is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eisai Co and Mountain High Acquisitions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain High Acquis and Eisai 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 Mountain High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain High Acquis has no effect on the direction of Eisai i.e., Eisai and Mountain High go up and down completely randomly.

Pair Corralation between Eisai and Mountain High

Assuming the 90 days horizon Eisai Co is expected to generate 0.62 times more return on investment than Mountain High. However, Eisai Co is 1.61 times less risky than Mountain High. It trades about -0.04 of its potential returns per unit of risk. Mountain High Acquisitions is currently generating about -0.08 per unit of risk. If you would invest  6,840  in Eisai Co on September 12, 2024 and sell it today you would lose (3,972) from holding Eisai Co or give up 58.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	31.12%
Values	Daily Returns

Eisai Co  vs.  Mountain High Acquisitions

Eisai

Risk-Adjusted Performance

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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 essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mountain High Acquis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mountain High Acquisitions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Mountain High is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Eisai and Mountain High

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

The idea behind Eisai Co and Mountain High Acquisitions 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.