Correlation Between One World and Eisai

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

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

Diversification Opportunities for One World and Eisai

0.69

Correlation Coefficient

One World  Eisai

Poor diversification

The 3 months correlation between One and Eisai is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding One World Pharma and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai and One World 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 One World Pharma 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 One World i.e., One World and Eisai go up and down completely randomly.

Pair Corralation between One World and Eisai

Given the investment horizon of 90 days One World Pharma is expected to generate 5.02 times more return on investment than Eisai. However, One World is 5.02 times more volatile than Eisai Co. It trades about 0.05 of its potential returns per unit of risk. Eisai Co is currently generating about -0.14 per unit of risk. If you would invest  2.24  in One World Pharma on September 18, 2024 and sell it today you would lose (0.27) from holding One World Pharma or give up 12.05% of portfolio value over 90 days.

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

One World Pharma  vs.  Eisai Co

One World Pharma

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in One World Pharma are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, One World exhibited 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. Despite inconsistent performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with One World and Eisai

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