Correlation Between Israel Opportunity and Israel China
Can any of the company-specific risk be diversified away by investing in both Israel Opportunity 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 Israel Opportunity and Israel China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Opportunity and Israel China Biotechnology, you can compare the effects of market volatilities on Israel Opportunity 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 Israel Opportunity with a short position of Israel China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Opportunity and Israel China.
Diversification Opportunities for Israel Opportunity and Israel China
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Israel and Israel is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Israel Opportunity 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 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 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 Israel Opportunity i.e., Israel Opportunity and Israel China go up and down completely randomly.
Pair Corralation between Israel Opportunity and Israel China
Assuming the 90 days trading horizon Israel Opportunity is expected to under-perform the Israel China. But the stock apears to be less risky and, when comparing its historical volatility, Israel Opportunity is 1.24 times less risky than Israel China. The stock trades about -0.12 of its potential returns per unit of risk. The Israel China Biotechnology is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 50,000 in Israel China Biotechnology on August 29, 2024 and sell it today you would earn a total of 9,900 from holding Israel China Biotechnology or generate 19.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Opportunity vs. Israel China Biotechnology
Performance |
| Timeline |
| Israel Opportunity |
| Israel China Biotech |
Israel Opportunity and Israel China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Opportunity and Israel China
The main advantage of trading using opposite Israel Opportunity and Israel China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Opportunity 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.| Israel Opportunity vs. Lapidoth | Israel Opportunity vs. Ilex Medical | Israel Opportunity vs. Aerodrome Group | Israel Opportunity vs. Opal Balance |
| Israel China vs. B Communications | Israel China vs. Nova | Israel China vs. Petrochemical | Israel China vs. Israel Opportunity |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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