Correlation Between Australis Capital and Eisai

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

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

Diversification Opportunities for Australis Capital and Eisai

0.16

Correlation Coefficient

Australis Capital  Eisai

Average diversification

The 3 months correlation between Australis and Eisai is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Australis Capital and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai and Australis Capital 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 Australis Capital are associated (or correlated) with Eisai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eisai has no effect on the direction of Australis Capital i.e., Australis Capital and Eisai go up and down completely randomly.

Pair Corralation between Australis Capital and Eisai

Assuming the 90 days horizon Australis Capital is expected to generate 75.62 times more return on investment than Eisai. However, Australis Capital is 75.62 times more volatile than Eisai Co. It trades about 0.12 of its potential returns per unit of risk. Eisai Co is currently generating about -0.31 per unit of risk. If you would invest  0.01  in Australis Capital on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Australis Capital or generate 0.0% return on investment over 90 days.

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

Australis Capital  vs.  Eisai Co

Australis Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Australis Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Australis Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Eisai

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. In spite of weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Australis Capital and Eisai

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

The idea behind Australis Capital and Eisai Co 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.