Correlation Between EHEALTH and Yakult Honsha

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

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

Diversification Opportunities for EHEALTH and Yakult Honsha

-0.62

Correlation Coefficient

EHEALTH  Yakult Honsha

Excellent diversification

The 3 months correlation between EHEALTH and Yakult is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding EHEALTH and Yakult Honsha CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yakult Honsha CoLtd and EHEALTH 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 EHEALTH are associated (or correlated) with Yakult Honsha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yakult Honsha CoLtd has no effect on the direction of EHEALTH i.e., EHEALTH and Yakult Honsha go up and down completely randomly.

Pair Corralation between EHEALTH and Yakult Honsha

Assuming the 90 days trading horizon EHEALTH is expected to under-perform the Yakult Honsha. In addition to that, EHEALTH is 2.08 times more volatile than Yakult Honsha CoLtd. It trades about -0.08 of its total potential returns per unit of risk. Yakult Honsha CoLtd is currently generating about 0.01 per unit of volatility. If you would invest  1,751  in Yakult Honsha CoLtd on December 30, 2024 and sell it today you would lose (1.00) from holding Yakult Honsha CoLtd or give up 0.06% of portfolio value over 90 days.

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

EHEALTH  vs.  Yakult Honsha CoLtd

EHEALTH

Risk-Adjusted Performance

Very Weak

Over the last 90 days EHEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Yakult Honsha CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yakult Honsha CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yakult Honsha is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with EHEALTH and Yakult Honsha

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

The idea behind EHEALTH and Yakult Honsha CoLtd 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.