Correlation Between Eisai and CannTrust Holdings

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

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

Diversification Opportunities for Eisai and CannTrust Holdings

-0.09

Correlation Coefficient

Eisai  CannTrust Holdings

Good diversification

The 3 months correlation between Eisai and CannTrust is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eisai Co and CannTrust Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CannTrust Holdings and Eisai 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 Eisai Co are associated (or correlated) with CannTrust Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CannTrust Holdings has no effect on the direction of Eisai i.e., Eisai and CannTrust Holdings go up and down completely randomly.

Pair Corralation between Eisai and CannTrust Holdings

If you would invest  0.01  in CannTrust Holdings on September 19, 2024 and sell it today you would earn a total of  0.00  from holding CannTrust Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Eisai Co  vs.  CannTrust Holdings

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.

CannTrust Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CannTrust Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, CannTrust Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Eisai and CannTrust Holdings

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

The idea behind Eisai Co and CannTrust Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.