Correlation Between Eisai Co and Real Brands

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

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

Diversification Opportunities for Eisai Co and Real Brands

0.82

Correlation Coefficient

Eisai Co  Real Brands

Very poor diversification

The 3 months correlation between Eisai and Real is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Eisai Co and Real Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Brands 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 Real Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Brands has no effect on the direction of Eisai Co i.e., Eisai Co and Real Brands go up and down completely randomly.

Pair Corralation between Eisai Co and Real Brands

Assuming the 90 days horizon Eisai Co is expected to under-perform the Real Brands. But the pink sheet apears to be less risky and, when comparing its historical volatility, Eisai Co is 9.67 times less risky than Real Brands. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Real Brands is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  0.85  in Real Brands on August 31, 2024 and sell it today you would lose (0.84) from holding Real Brands or give up 98.82% of portfolio value over 90 days.

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

Eisai Co  vs.  Real Brands

Eisai Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eisai Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Real Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Real Brands is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eisai Co and Real Brands

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

The idea behind Eisai Co and Real Brands 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.