Correlation Between Discount Investment and Israel China
Can any of the company-specific risk be diversified away by investing in both Discount Investment and Israel China 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 Discount Investment and Israel China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Discount Investment Corp and Israel China Biotechnology, you can compare the effects of market volatilities on Discount Investment and Israel China 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 Discount Investment with a short position of Israel China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discount Investment and Israel China.
Diversification Opportunities for Discount Investment and Israel China
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Discount and Israel is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Discount Investment Corp and Israel China Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel China Biotech and Discount Investment 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 Discount Investment Corp are associated (or correlated) with Israel China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel China Biotech has no effect on the direction of Discount Investment i.e., Discount Investment and Israel China go up and down completely randomly.
Pair Corralation between Discount Investment and Israel China
Assuming the 90 days trading horizon Discount Investment is expected to generate 2.68 times less return on investment than Israel China. But when comparing it to its historical volatility, Discount Investment Corp is 3.43 times less risky than Israel China. It trades about 0.04 of its potential returns per unit of risk. Israel China Biotechnology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 70,190 in Israel China Biotechnology on September 12, 2024 and sell it today you would lose (13,830) from holding Israel China Biotechnology or give up 19.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discount Investment Corp vs. Israel China Biotechnology
Performance |
| Timeline |
| Discount Investment Corp |
| Israel China Biotech |
Discount Investment and Israel China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discount Investment and Israel China
The main advantage of trading using opposite Discount Investment and Israel China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discount Investment position performs unexpectedly, Israel China 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 Israel China will offset losses from the drop in Israel China's long position.| Discount Investment vs. Aran Research and | Discount Investment vs. Al Bad Massuot Yitzhak | Discount Investment vs. Analyst IMS Investment | Discount Investment vs. Golan Plastic |
| Israel China vs. B Communications | Israel China vs. Photomyne | Israel China vs. M Yochananof and | Israel China vs. Clal Biotechnology Industries |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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