Correlation Between Israel China and Value Capital
Can any of the company-specific risk be diversified away by investing in both Israel China and Value Capital 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 Value Capital 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 Value Capital One, you can compare the effects of market volatilities on Israel China and Value Capital 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 Value Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel China and Value Capital.
Diversification Opportunities for Israel China and Value Capital
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Israel and Value is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Israel China Biotechnology and Value Capital One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Capital One 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 Value Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Capital One has no effect on the direction of Israel China i.e., Israel China and Value Capital go up and down completely randomly.
Pair Corralation between Israel China and Value Capital
Assuming the 90 days trading horizon Israel China Biotechnology is expected to generate 1.43 times more return on investment than Value Capital. However, Israel China is 1.43 times more volatile than Value Capital One. It trades about -0.07 of its potential returns per unit of risk. Value Capital One is currently generating about -0.11 per unit of risk. If you would invest 103,000 in Israel China Biotechnology on September 3, 2024 and sell it today you would lose (48,710) from holding Israel China Biotechnology or give up 47.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel China Biotechnology vs. Value Capital One
Performance |
| Timeline |
| Israel China Biotech |
| Value Capital One |
Israel China and Value Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel China and Value Capital
The main advantage of trading using opposite Israel China and Value Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel China position performs unexpectedly, Value Capital 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 Value Capital will offset losses from the drop in Value Capital's long position.| Israel China vs. G Willi Food International | Israel China vs. TAT Technologies | Israel China vs. Sarine Technologies | Israel China vs. Clal Biotechnology Industries |
| Value Capital vs. Bezeq Israeli Telecommunication | Value Capital vs. Batm Advanced Communications | Value Capital vs. Arad Investment Industrial | Value Capital vs. Oron Group Investments |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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