Correlation Between Eli Lilly and COSCIENS Biopharma

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

Diversification Opportunities for Eli Lilly and COSCIENS Biopharma

-0.31

Correlation Coefficient

Eli Lilly  COSCIENS Biopharma

Very good diversification

The 3 months correlation between Eli and COSCIENS is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and COSCIENS Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCIENS Biopharma 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 COSCIENS Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCIENS Biopharma has no effect on the direction of Eli Lilly i.e., Eli Lilly and COSCIENS Biopharma go up and down completely randomly.

Pair Corralation between Eli Lilly and COSCIENS Biopharma

Considering the 90-day investment horizon Eli Lilly and is expected to generate 0.36 times more return on investment than COSCIENS Biopharma. However, Eli Lilly and is 2.81 times less risky than COSCIENS Biopharma. It trades about 0.12 of its potential returns per unit of risk. COSCIENS Biopharma is currently generating about 0.02 per unit of risk. If you would invest  82,529  in Eli Lilly and on December 6, 2024 and sell it today you would earn a total of  10,443  from holding Eli Lilly and or generate 12.65% return on investment over 90 days.

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

Eli Lilly and  vs.  COSCIENS Biopharma

Eli Lilly

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eli Lilly and are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish essential indicators, Eli Lilly showed solid returns over the last few months and may actually be approaching a breakup point.

COSCIENS Biopharma

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COSCIENS Biopharma are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, COSCIENS Biopharma may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eli Lilly and COSCIENS Biopharma

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

The idea behind Eli Lilly and and COSCIENS Biopharma 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.