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
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Clal and Petrochemical is 0.09. 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 under-perform the Petrochemical. But the stock apears to be less risky and, when comparing its historical volatility, Clal Biotechnology Industries is 1.32 times less risky than Petrochemical. The stock trades about -0.07 of its potential returns per unit of risk. The Petrochemical is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 18,330 in Petrochemical on November 3, 2024 and sell it today you would earn a total of 3,780 from holding Petrochemical or generate 20.62% 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. Scope Metals Group | Petrochemical vs. Migdal Insurance | Petrochemical vs. Elbit Medical Technologies | Petrochemical vs. Amir Marketing and |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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