Correlation Between Value Capital and Israel China
Can any of the company-specific risk be diversified away by investing in both Value Capital 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 Value Capital and Israel China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Capital One and Israel China Biotechnology, you can compare the effects of market volatilities on Value Capital 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 Value Capital with a short position of Israel China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Capital and Israel China.
Diversification Opportunities for Value Capital and Israel China
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Value and Israel is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Value Capital One 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 Value Capital 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 Value Capital One 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 Value Capital i.e., Value Capital and Israel China go up and down completely randomly.
Pair Corralation between Value Capital and Israel China
Assuming the 90 days trading horizon Value Capital One is expected to under-perform the Israel China. But the stock apears to be less risky and, when comparing its historical volatility, Value Capital One is 1.77 times less risky than Israel China. The stock trades about -0.4 of its potential returns per unit of risk. The Israel China Biotechnology is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 63,890 in Israel China Biotechnology on September 13, 2024 and sell it today you would lose (5,090) from holding Israel China Biotechnology or give up 7.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Value Capital One vs. Israel China Biotechnology
Performance |
| Timeline |
| Value Capital One |
| Israel China Biotech |
Value Capital and Israel China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Capital and Israel China
The main advantage of trading using opposite Value Capital and Israel China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Capital 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.| Value Capital vs. One Software Technologies | Value Capital vs. Magic Software Enterprises | Value Capital vs. YH Dimri Construction | Value Capital vs. Hiron Trade Investments Industrial |
| Israel China vs. GODM Investments | Israel China vs. Feat Fund Investments | Israel China vs. Scope Metals Group | Israel China vs. One Software Technologies |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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