Correlation Between El Al and Israel China
Can any of the company-specific risk be diversified away by investing in both El Al 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 El Al and Israel China 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 Israel China Biotechnology, you can compare the effects of market volatilities on El Al 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 El Al with a short position of Israel China. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Al and Israel China.
Diversification Opportunities for El Al and Israel China
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ELAL and Israel is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel 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 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 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 El Al i.e., El Al and Israel China go up and down completely randomly.
Pair Corralation between El Al and Israel China
Assuming the 90 days trading horizon El Al Israel is expected to under-perform the Israel China. But the stock apears to be less risky and, when comparing its historical volatility, El Al Israel is 1.02 times less risky than Israel China. The stock trades about -0.17 of its potential returns per unit of risk. The Israel China Biotechnology is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 62,500 in Israel China Biotechnology on September 12, 2024 and sell it today you would lose (6,140) from holding Israel China Biotechnology or give up 9.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Al Israel vs. Israel China Biotechnology
Performance |
| Timeline |
| El Al Israel |
| Israel China Biotech |
El Al and Israel China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Al and Israel China
The main advantage of trading using opposite El Al and Israel China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Al 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.| El Al vs. Delek Group | El Al vs. Teva Pharmaceutical Industries | El Al vs. Fattal 1998 Holdings | El Al vs. Bank Leumi Le Israel |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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