Correlation Between Israel Opportunity and Clal Biotechnology
Can any of the company-specific risk be diversified away by investing in both Israel Opportunity 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 Israel Opportunity and Clal Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Opportunity and Clal Biotechnology Industries, you can compare the effects of market volatilities on Israel Opportunity 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 Israel Opportunity with a short position of Clal Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Opportunity and Clal Biotechnology.
Diversification Opportunities for Israel Opportunity and Clal Biotechnology
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Israel and Clal is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Israel Opportunity and Clal Biotechnology Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Biotechnology and Israel Opportunity 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 Opportunity 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 Israel Opportunity i.e., Israel Opportunity and Clal Biotechnology go up and down completely randomly.
Pair Corralation between Israel Opportunity and Clal Biotechnology
Assuming the 90 days trading horizon Israel Opportunity is expected to generate 9.53 times more return on investment than Clal Biotechnology. However, Israel Opportunity is 9.53 times more volatile than Clal Biotechnology Industries. It trades about 0.07 of its potential returns per unit of risk. Clal Biotechnology Industries is currently generating about 0.15 per unit of risk. If you would invest 9,440 in Israel Opportunity on November 27, 2024 and sell it today you would earn a total of 320.00 from holding Israel Opportunity or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Opportunity vs. Clal Biotechnology Industries
Performance |
| Timeline |
| Israel Opportunity |
| Clal Biotechnology |
Israel Opportunity and Clal Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Opportunity and Clal Biotechnology
The main advantage of trading using opposite Israel Opportunity and Clal Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Opportunity 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.| Israel Opportunity vs. Clal Biotechnology Industries | Israel Opportunity vs. Teuza A Fairchild | Israel Opportunity vs. Golan Plastic | Israel Opportunity vs. Augwind Energy Tech |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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