Correlation Between Avrot Industries and BioLine RX
Can any of the company-specific risk be diversified away by investing in both Avrot Industries and BioLine RX 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 Avrot Industries and BioLine RX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avrot Industries and BioLine RX, you can compare the effects of market volatilities on Avrot Industries and BioLine RX 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 Avrot Industries with a short position of BioLine RX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avrot Industries and BioLine RX.
Diversification Opportunities for Avrot Industries and BioLine RX
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avrot and BioLine is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Avrot Industries and BioLine RX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLine RX and Avrot Industries 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 Avrot Industries are associated (or correlated) with BioLine RX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLine RX has no effect on the direction of Avrot Industries i.e., Avrot Industries and BioLine RX go up and down completely randomly.
Pair Corralation between Avrot Industries and BioLine RX
Assuming the 90 days trading horizon Avrot Industries is expected to generate 0.11 times more return on investment than BioLine RX. However, Avrot Industries is 9.08 times less risky than BioLine RX. It trades about -0.24 of its potential returns per unit of risk. BioLine RX is currently generating about -0.09 per unit of risk. If you would invest 4,950 in Avrot Industries on August 26, 2024 and sell it today you would lose (160.00) from holding Avrot Industries or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avrot Industries vs. BioLine RX
Performance |
| Timeline |
| Avrot Industries |
| BioLine RX |
Avrot Industries and BioLine RX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avrot Industries and BioLine RX
The main advantage of trading using opposite Avrot Industries and BioLine RX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avrot Industries position performs unexpectedly, BioLine RX 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 BioLine RX will offset losses from the drop in BioLine RX's long position.| Avrot Industries vs. Netz Hotels | Avrot Industries vs. Automatic Bank Services | Avrot Industries vs. Rapac Communication Infrastructure | Avrot Industries vs. Harel Insurance Investments |
| BioLine RX vs. Netz Hotels | BioLine RX vs. Migdal Insurance | BioLine RX vs. Harel Insurance Investments | BioLine RX vs. Menora Miv Hld |
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 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.
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