Correlation Between First International and Biomedix Incubator
Can any of the company-specific risk be diversified away by investing in both First International and Biomedix Incubator 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 First International and Biomedix Incubator into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First International Bank and Biomedix Incubator, you can compare the effects of market volatilities on First International and Biomedix Incubator 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 First International with a short position of Biomedix Incubator. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and Biomedix Incubator.
Diversification Opportunities for First International and Biomedix Incubator
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Biomedix is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and Biomedix Incubator in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomedix Incubator and First International 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 First International Bank are associated (or correlated) with Biomedix Incubator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomedix Incubator has no effect on the direction of First International i.e., First International and Biomedix Incubator go up and down completely randomly.
Pair Corralation between First International and Biomedix Incubator
Assuming the 90 days trading horizon First International Bank is expected to generate 0.18 times more return on investment than Biomedix Incubator. However, First International Bank is 5.68 times less risky than Biomedix Incubator. It trades about 0.4 of its potential returns per unit of risk. Biomedix Incubator is currently generating about -0.13 per unit of risk. If you would invest 1,609,000 in First International Bank on August 28, 2024 and sell it today you would earn a total of 111,000 from holding First International Bank or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First International Bank vs. Biomedix Incubator
Performance |
| Timeline |
| First International Bank |
| Biomedix Incubator |
First International and Biomedix Incubator Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First International and Biomedix Incubator
The main advantage of trading using opposite First International and Biomedix Incubator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First International position performs unexpectedly, Biomedix Incubator 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 Biomedix Incubator will offset losses from the drop in Biomedix Incubator's long position.| First International vs. Israel Discount Bank | First International vs. Mizrahi Tefahot | First International vs. Bank Leumi Le Israel | First International vs. Bank Hapoalim |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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