Correlation Between Clal Biotechnology and Sella Real

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Can any of the company-specific risk be diversified away by investing in both Clal Biotechnology and Sella Real 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 Sella Real 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 Sella Real Estate, you can compare the effects of market volatilities on Clal Biotechnology and Sella Real 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 Sella Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Biotechnology and Sella Real.

Diversification Opportunities for Clal Biotechnology and Sella Real

-0.74
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Clal and Sella is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Clal Biotechnology Industries and Sella Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sella Real Estate 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 Sella Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sella Real Estate has no effect on the direction of Clal Biotechnology i.e., Clal Biotechnology and Sella Real go up and down completely randomly.

Pair Corralation between Clal Biotechnology and Sella Real

Assuming the 90 days trading horizon Clal Biotechnology Industries is expected to under-perform the Sella Real. In addition to that, Clal Biotechnology is 1.48 times more volatile than Sella Real Estate. It trades about -0.07 of its total potential returns per unit of risk. Sella Real Estate is currently generating about 0.43 per unit of volatility. If you would invest  72,409  in Sella Real Estate on October 22, 2024 and sell it today you would earn a total of  25,491  from holding Sella Real Estate or generate 35.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.0%
ValuesDaily Returns

Clal Biotechnology Industries  vs.  Sella Real Estate

 Performance 
       Timeline  
Clal Biotechnology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Sella Real Estate 

Risk-Adjusted Performance

33 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Sella Real Estate are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sella Real unveiled solid returns over the last few months and may actually be approaching a breakup point.

Clal Biotechnology and Sella Real Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Clal Biotechnology and Sella Real

The main advantage of trading using opposite Clal Biotechnology and Sella Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Biotechnology position performs unexpectedly, Sella Real 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 Sella Real will offset losses from the drop in Sella Real's long position.
The idea behind Clal Biotechnology Industries and Sella Real Estate 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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