Correlation Between Eli Lilly and CareCloud

Can any of the company-specific risk be diversified away by investing in both Eli Lilly and CareCloud 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 CareCloud 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 CareCloud, you can compare the effects of market volatilities on Eli Lilly and CareCloud 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 CareCloud. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and CareCloud.

Diversification Opportunities for Eli Lilly and CareCloud

0.42

Correlation Coefficient

Eli Lilly  CareCloud

Very weak diversification

The 3 months correlation between Eli and CareCloud is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and CareCloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareCloud 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 CareCloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareCloud has no effect on the direction of Eli Lilly i.e., Eli Lilly and CareCloud go up and down completely randomly.

Pair Corralation between Eli Lilly and CareCloud

Considering the 90-day investment horizon Eli Lilly is expected to generate 1.05 times less return on investment than CareCloud. In addition to that, Eli Lilly is 1.06 times more volatile than CareCloud. It trades about 0.08 of its total potential returns per unit of risk. CareCloud is currently generating about 0.09 per unit of volatility. If you would invest  1,784  in CareCloud on December 20, 2024 and sell it today you would earn a total of  177.00  from holding CareCloud or generate 9.92% return on investment over 90 days.

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

Eli Lilly and  vs.  CareCloud

Eli Lilly

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eli Lilly and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish essential indicators, Eli Lilly may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CareCloud

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CareCloud are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, CareCloud may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eli Lilly and CareCloud

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

The idea behind Eli Lilly and and CareCloud 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.