Correlation Between Vericel Corp and Protalix Biotherapeutics

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Can any of the company-specific risk be diversified away by investing in both Vericel Corp and Protalix Biotherapeutics 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 Vericel Corp and Protalix Biotherapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vericel Corp Ord and Protalix Biotherapeutics, you can compare the effects of market volatilities on Vericel Corp and Protalix Biotherapeutics 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 Vericel Corp with a short position of Protalix Biotherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vericel Corp and Protalix Biotherapeutics.

Diversification Opportunities for Vericel Corp and Protalix Biotherapeutics

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Vericel and Protalix is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vericel Corp Ord and Protalix Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protalix Biotherapeutics and Vericel Corp 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 Vericel Corp Ord are associated (or correlated) with Protalix Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protalix Biotherapeutics has no effect on the direction of Vericel Corp i.e., Vericel Corp and Protalix Biotherapeutics go up and down completely randomly.

Pair Corralation between Vericel Corp and Protalix Biotherapeutics

Given the investment horizon of 90 days Vericel Corp Ord is expected to generate 0.63 times more return on investment than Protalix Biotherapeutics. However, Vericel Corp Ord is 1.58 times less risky than Protalix Biotherapeutics. It trades about 0.06 of its potential returns per unit of risk. Protalix Biotherapeutics is currently generating about 0.03 per unit of risk. If you would invest  4,568  in Vericel Corp Ord on August 27, 2024 and sell it today you would earn a total of  1,343  from holding Vericel Corp Ord or generate 29.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Vericel Corp Ord  vs.  Protalix Biotherapeutics

 Performance 
       Timeline  
Vericel Corp Ord 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Vericel Corp Ord are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Vericel Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Protalix Biotherapeutics 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Protalix Biotherapeutics are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Protalix Biotherapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Vericel Corp and Protalix Biotherapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vericel Corp and Protalix Biotherapeutics

The main advantage of trading using opposite Vericel Corp and Protalix Biotherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vericel Corp position performs unexpectedly, Protalix Biotherapeutics 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 Protalix Biotherapeutics will offset losses from the drop in Protalix Biotherapeutics' long position.
The idea behind Vericel Corp Ord and Protalix Biotherapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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