Correlation Between Clal Biotechnology and Pluristem

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

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

Diversification Opportunities for Clal Biotechnology and Pluristem

0.07

Correlation Coefficient

Clal Biotechnology  Pluristem

Significant diversification

The 3 months correlation between Clal and Pluristem is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Clal Biotechnology Industries and Pluristem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pluristem and Clal Biotechnology 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 Clal Biotechnology Industries are associated (or correlated) with Pluristem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pluristem has no effect on the direction of Clal Biotechnology i.e., Clal Biotechnology and Pluristem go up and down completely randomly.

Pair Corralation between Clal Biotechnology and Pluristem

Assuming the 90 days trading horizon Clal Biotechnology Industries is expected to under-perform the Pluristem. But the stock apears to be less risky and, when comparing its historical volatility, Clal Biotechnology Industries is 1.44 times less risky than Pluristem. The stock trades about 0.0 of its potential returns per unit of risk. The Pluristem is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  159,800  in Pluristem on December 30, 2024 and sell it today you would earn a total of  200.00  from holding Pluristem or generate 0.13% return on investment over 90 days.

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

Clal Biotechnology Industries  vs.  Pluristem

Clal Biotechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clal Biotechnology Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Clal Biotechnology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pluristem

Risk-Adjusted Performance

Weak

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

Pair Trading with Clal Biotechnology and Pluristem

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

The idea behind Clal Biotechnology Industries and Pluristem 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.