Correlation Between Cedar Realty and Eisai

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

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

Diversification Opportunities for Cedar Realty and Eisai

-0.68

Correlation Coefficient

Cedar Realty  Eisai

Excellent diversification

The 3 months correlation between Cedar and Eisai is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai and Cedar Realty 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 Cedar Realty Trust 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 Cedar Realty i.e., Cedar Realty and Eisai go up and down completely randomly.

Pair Corralation between Cedar Realty and Eisai

Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 1.49 times more return on investment than Eisai. However, Cedar Realty is 1.49 times more volatile than Eisai Co. It trades about 0.11 of its potential returns per unit of risk. Eisai Co is currently generating about -0.33 per unit of risk. If you would invest  1,437  in Cedar Realty Trust on September 19, 2024 and sell it today you would earn a total of  233.00  from holding Cedar Realty Trust or generate 16.21% return on investment over 90 days.

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

Cedar Realty Trust  vs.  Eisai Co

Cedar Realty Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Cedar Realty sustained 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 Cedar Realty and Eisai

The main advantage of trading using opposite Cedar Realty and Eisai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty 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 Cedar Realty Trust 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.