Correlation Between Eli Lilly and Calian Technologies

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

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

Diversification Opportunities for Eli Lilly and Calian Technologies

0.17

Correlation Coefficient

Eli Lilly  Calian Technologies

Average diversification

The 3 months correlation between Eli and Calian is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Calian Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calian Technologies and Eli Lilly 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 Eli Lilly and are associated (or correlated) with Calian Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calian Technologies has no effect on the direction of Eli Lilly i.e., Eli Lilly and Calian Technologies go up and down completely randomly.

Pair Corralation between Eli Lilly and Calian Technologies

Assuming the 90 days trading horizon Eli Lilly and is expected to generate 1.19 times more return on investment than Calian Technologies. However, Eli Lilly is 1.19 times more volatile than Calian Technologies. It trades about 0.05 of its potential returns per unit of risk. Calian Technologies is currently generating about -0.03 per unit of risk. If you would invest  2,165  in Eli Lilly and on September 24, 2024 and sell it today you would earn a total of  693.00  from holding Eli Lilly and or generate 32.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	64.06%
Values	Daily Returns

Eli Lilly and  vs.  Calian Technologies

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 abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Calian Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calian Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Calian Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eli Lilly and Calian Technologies

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

The idea behind Eli Lilly and and Calian Technologies 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..