Correlation Between Clal Biotechnology and Libra Insurance
Can any of the company-specific risk be diversified away by investing in both Clal Biotechnology and Libra Insurance 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 Clal Biotechnology and Libra Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clal Biotechnology Industries and Libra Insurance, you can compare the effects of market volatilities on Clal Biotechnology and Libra Insurance 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 Clal Biotechnology with a short position of Libra Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Biotechnology and Libra Insurance.
Diversification Opportunities for Clal Biotechnology and Libra Insurance
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Clal and Libra is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Clal Biotechnology Industries and Libra Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libra Insurance and Clal Biotechnology 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 Clal Biotechnology Industries are associated (or correlated) with Libra Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libra Insurance has no effect on the direction of Clal Biotechnology i.e., Clal Biotechnology and Libra Insurance go up and down completely randomly.
Pair Corralation between Clal Biotechnology and Libra Insurance
Assuming the 90 days trading horizon Clal Biotechnology Industries is expected to under-perform the Libra Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Clal Biotechnology Industries is 1.58 times less risky than Libra Insurance. The stock trades about -0.15 of its potential returns per unit of risk. The Libra Insurance is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 73,727 in Libra Insurance on September 4, 2024 and sell it today you would earn a total of 13,563 from holding Libra Insurance or generate 18.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Clal Biotechnology Industries vs. Libra Insurance
Performance |
| Timeline |
| Clal Biotechnology |
| Libra Insurance |
Clal Biotechnology and Libra Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Biotechnology and Libra Insurance
The main advantage of trading using opposite Clal Biotechnology and Libra Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Biotechnology position performs unexpectedly, Libra Insurance 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 Libra Insurance will offset losses from the drop in Libra Insurance's long position.| Clal Biotechnology vs. Kamada | Clal Biotechnology vs. BioLine RX | Clal Biotechnology vs. Evogene | Clal Biotechnology vs. Bezeq Israeli Telecommunication |
| Libra Insurance vs. Suny Cellular Communication | Libra Insurance vs. Oron Group Investments | Libra Insurance vs. Skyline Investments | Libra Insurance vs. Aura Investments |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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