Correlation Between Israel China and NewMed Energy
Can any of the company-specific risk be diversified away by investing in both Israel China and NewMed Energy 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 Israel China and NewMed Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel China Biotechnology and NewMed Energy , you can compare the effects of market volatilities on Israel China and NewMed Energy 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 Israel China with a short position of NewMed Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel China and NewMed Energy.
Diversification Opportunities for Israel China and NewMed Energy
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Israel and NewMed is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Israel China Biotechnology and NewMed Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewMed Energy and Israel China 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 Israel China Biotechnology are associated (or correlated) with NewMed Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewMed Energy has no effect on the direction of Israel China i.e., Israel China and NewMed Energy go up and down completely randomly.
Pair Corralation between Israel China and NewMed Energy
Assuming the 90 days trading horizon Israel China Biotechnology is expected to generate 5.65 times more return on investment than NewMed Energy. However, Israel China is 5.65 times more volatile than NewMed Energy . It trades about 0.03 of its potential returns per unit of risk. NewMed Energy is currently generating about 0.06 per unit of risk. If you would invest 62,930 in Israel China Biotechnology on September 1, 2024 and sell it today you would lose (8,640) from holding Israel China Biotechnology or give up 13.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel China Biotechnology vs. NewMed Energy
Performance |
| Timeline |
| Israel China Biotech |
| NewMed Energy |
Israel China and NewMed Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel China and NewMed Energy
The main advantage of trading using opposite Israel China and NewMed Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel China position performs unexpectedly, NewMed Energy 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 NewMed Energy will offset losses from the drop in NewMed Energy's long position.| Israel China vs. YD More Investments | Israel China vs. Netz Hotels | Israel China vs. YH Dimri Construction | Israel China vs. Aura Investments |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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