Correlation Between El Al and Clal Biotechnology
Can any of the company-specific risk be diversified away by investing in both El Al and Clal Biotechnology 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 El Al and Clal Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Al Israel and Clal Biotechnology Industries, you can compare the effects of market volatilities on El Al and Clal Biotechnology 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 El Al with a short position of Clal Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Al and Clal Biotechnology.
Diversification Opportunities for El Al and Clal Biotechnology
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ELAL and Clal is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel and Clal Biotechnology Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Biotechnology and El Al 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 El Al Israel are associated (or correlated) with Clal Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Biotechnology has no effect on the direction of El Al i.e., El Al and Clal Biotechnology go up and down completely randomly.
Pair Corralation between El Al and Clal Biotechnology
Assuming the 90 days trading horizon El Al Israel is expected to under-perform the Clal Biotechnology. In addition to that, El Al is 1.84 times more volatile than Clal Biotechnology Industries. It trades about -0.17 of its total potential returns per unit of risk. Clal Biotechnology Industries is currently generating about -0.09 per unit of volatility. If you would invest 3,650 in Clal Biotechnology Industries on September 13, 2024 and sell it today you would lose (150.00) from holding Clal Biotechnology Industries or give up 4.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Al Israel vs. Clal Biotechnology Industries
Performance |
| Timeline |
| El Al Israel |
| Clal Biotechnology |
El Al and Clal Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Al and Clal Biotechnology
The main advantage of trading using opposite El Al and Clal Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Al position performs unexpectedly, Clal Biotechnology 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 Clal Biotechnology will offset losses from the drop in Clal Biotechnology's long position.| El Al vs. Aran Research and | El Al vs. Al Bad Massuot Yitzhak | El Al vs. Analyst IMS Investment | El Al vs. Golan Plastic |
| Clal Biotechnology vs. Kamada | Clal Biotechnology vs. BioLine RX | Clal Biotechnology vs. Evogene | Clal Biotechnology vs. Bezeq Israeli Telecommunication |
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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