Correlation Between Eli Lilly and Ainos

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

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

Diversification Opportunities for Eli Lilly and Ainos

-0.3

Correlation Coefficient

Eli Lilly  Ainos

Very good diversification

The 3 months correlation between Eli and Ainos is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Ainos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ainos Inc and Eli Lilly 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 Eli Lilly and are associated (or correlated) with Ainos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ainos Inc has no effect on the direction of Eli Lilly i.e., Eli Lilly and Ainos go up and down completely randomly.

Pair Corralation between Eli Lilly and Ainos

Considering the 90-day investment horizon Eli Lilly is expected to generate 13.48 times less return on investment than Ainos. But when comparing it to its historical volatility, Eli Lilly and is 17.77 times less risky than Ainos. It trades about 0.15 of its potential returns per unit of risk. Ainos Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7.99  in Ainos Inc on March 13, 2024 and sell it today you would lose (1.18) from holding Ainos Inc or give up 14.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	49.21%
Values	Daily Returns

Eli Lilly and  vs.  Ainos Inc

Eli Lilly

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eli Lilly and are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Eli Lilly showed solid returns over the last few months and may actually be approaching a breakup point.

Ainos Inc

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Ainos Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak fundamental indicators, Ainos showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eli Lilly and Ainos

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

The idea behind Eli Lilly and and Ainos Inc 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.