Correlation Between Bio Meat and Clal Industries

Can any of the company-specific risk be diversified away by investing in both Bio Meat and Clal Industries 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 Bio Meat and Clal Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bio Meat Foodtech and Clal Industries and, you can compare the effects of market volatilities on Bio Meat and Clal Industries 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 Bio Meat with a short position of Clal Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Meat and Clal Industries.

Diversification Opportunities for Bio Meat and Clal Industries

0.09

Correlation Coefficient

Bio Meat  Clal Industries

Significant diversification

The 3 months correlation between Bio and Clal is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bio Meat Foodtech and Clal Industries and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Industries and Bio Meat 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 Bio Meat Foodtech are associated (or correlated) with Clal Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Industries has no effect on the direction of Bio Meat i.e., Bio Meat and Clal Industries go up and down completely randomly.

Pair Corralation between Bio Meat and Clal Industries

Assuming the 90 days trading horizon Bio Meat Foodtech is expected to under-perform the Clal Industries. In addition to that, Bio Meat is 2.34 times more volatile than Clal Industries and. It trades about -0.76 of its total potential returns per unit of risk. Clal Industries and is currently generating about 0.24 per unit of volatility. If you would invest  207,500  in Clal Industries and on December 3, 2024 and sell it today you would earn a total of  14,600  from holding Clal Industries and or generate 7.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bio Meat Foodtech  vs.  Clal Industries and

Bio Meat Foodtech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Meat Foodtech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bio Meat sustained solid returns over the last few months and may actually be approaching a breakup point.

Clal Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Industries and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Clal Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bio Meat and Clal Industries

The main advantage of trading using opposite Bio Meat and Clal Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Meat position performs unexpectedly, Clal Industries 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 Industries will offset losses from the drop in Clal Industries' long position.

The idea behind Bio Meat Foodtech and Clal Industries and 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.