Correlation Between Petrochemical and Ilex Medical
Can any of the company-specific risk be diversified away by investing in both Petrochemical and Ilex Medical 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 Petrochemical and Ilex Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrochemical and Ilex Medical, you can compare the effects of market volatilities on Petrochemical and Ilex Medical 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 Petrochemical with a short position of Ilex Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrochemical and Ilex Medical.
Diversification Opportunities for Petrochemical and Ilex Medical
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Petrochemical and Ilex is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Petrochemical and Ilex Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilex Medical and Petrochemical 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 Petrochemical are associated (or correlated) with Ilex Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilex Medical has no effect on the direction of Petrochemical i.e., Petrochemical and Ilex Medical go up and down completely randomly.
Pair Corralation between Petrochemical and Ilex Medical
Assuming the 90 days trading horizon Petrochemical is expected to under-perform the Ilex Medical. But the stock apears to be less risky and, when comparing its historical volatility, Petrochemical is 1.3 times less risky than Ilex Medical. The stock trades about -0.04 of its potential returns per unit of risk. The Ilex Medical is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 641,900 in Ilex Medical on September 1, 2024 and sell it today you would earn a total of 144,000 from holding Ilex Medical or generate 22.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrochemical vs. Ilex Medical
Performance |
| Timeline |
| Petrochemical |
| Ilex Medical |
Petrochemical and Ilex Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrochemical and Ilex Medical
The main advantage of trading using opposite Petrochemical and Ilex Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrochemical position performs unexpectedly, Ilex Medical 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 Ilex Medical will offset losses from the drop in Ilex Medical's long position.| Petrochemical vs. Brainsway | Petrochemical vs. Mivne Real Estate | Petrochemical vs. Photomyne | Petrochemical vs. Israel Land Development |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |