Correlation Between Compugen and Pluristem
Can any of the company-specific risk be diversified away by investing in both Compugen and Pluristem 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 Compugen and Pluristem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compugen and Pluristem, you can compare the effects of market volatilities on Compugen and Pluristem 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 Compugen with a short position of Pluristem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compugen and Pluristem.
Diversification Opportunities for Compugen and Pluristem
Modest diversification
The 3 months correlation between Compugen and Pluristem is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Compugen and Pluristem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pluristem and Compugen 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 Compugen are associated (or correlated) with Pluristem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pluristem has no effect on the direction of Compugen i.e., Compugen and Pluristem go up and down completely randomly.
Pair Corralation between Compugen and Pluristem
Assuming the 90 days trading horizon Compugen is expected to under-perform the Pluristem. But the stock apears to be less risky and, when comparing its historical volatility, Compugen is 1.38 times less risky than Pluristem. The stock trades about -0.03 of its potential returns per unit of risk. The Pluristem is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 169,400 in Pluristem on August 31, 2024 and sell it today you would earn a total of 31,600 from holding Pluristem or generate 18.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compugen vs. Pluristem
Performance |
| Timeline |
| Compugen |
| Pluristem |
Compugen and Pluristem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compugen and Pluristem
The main advantage of trading using opposite Compugen and Pluristem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compugen position performs unexpectedly, Pluristem 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 Pluristem will offset losses from the drop in Pluristem's long position.The idea behind Compugen and Pluristem 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.| Pluristem vs. Veridis Environment | Pluristem vs. MediPress Health Limited Partnership | Pluristem vs. Clal Biotechnology Industries | Pluristem vs. Harel Insurance 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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