Correlation Between Clal Biotechnology and Petrochemical
Can any of the company-specific risk be diversified away by investing in both Clal Biotechnology and Petrochemical 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 Petrochemical 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 Petrochemical, you can compare the effects of market volatilities on Clal Biotechnology and Petrochemical 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 Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Biotechnology and Petrochemical.
Diversification Opportunities for Clal Biotechnology and Petrochemical
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Clal and Petrochemical is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Clal Biotechnology Industries and Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrochemical 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 Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrochemical has no effect on the direction of Clal Biotechnology i.e., Clal Biotechnology and Petrochemical go up and down completely randomly.
Pair Corralation between Clal Biotechnology and Petrochemical
Assuming the 90 days trading horizon Clal Biotechnology Industries is expected to generate 0.58 times more return on investment than Petrochemical. However, Clal Biotechnology Industries is 1.73 times less risky than Petrochemical. It trades about 0.15 of its potential returns per unit of risk. Petrochemical is currently generating about 0.04 per unit of risk. If you would invest 3,440 in Clal Biotechnology Industries on November 27, 2024 and sell it today you would earn a total of 100.00 from holding Clal Biotechnology Industries or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clal Biotechnology Industries vs. Petrochemical
Performance |
| Timeline |
| Clal Biotechnology |
| Petrochemical |
Clal Biotechnology and Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Biotechnology and Petrochemical
The main advantage of trading using opposite Clal Biotechnology and Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Biotechnology position performs unexpectedly, Petrochemical 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 Petrochemical will offset losses from the drop in Petrochemical's long position.| Clal Biotechnology vs. Kamada | Clal Biotechnology vs. BioLine RX | Clal Biotechnology vs. Evogene | Clal Biotechnology vs. Bezeq Israeli Telecommunication |
| Petrochemical vs. Rapac Communication Infrastructure | Petrochemical vs. Skyline Investments | Petrochemical vs. Teuza A Fairchild | Petrochemical vs. Ormat Technologies |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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