Correlation Between Clal Industries and Bonus Biogroup

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

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

Diversification Opportunities for Clal Industries and Bonus Biogroup

-0.6

Correlation Coefficient

Clal Industries  Bonus Biogroup

Excellent diversification

The 3 months correlation between Clal and Bonus is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Clal Industries and and Bonus Biogroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonus Biogroup and Clal Industries 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 Industries and are associated (or correlated) with Bonus Biogroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonus Biogroup has no effect on the direction of Clal Industries i.e., Clal Industries and Bonus Biogroup go up and down completely randomly.

Pair Corralation between Clal Industries and Bonus Biogroup

Assuming the 90 days trading horizon Clal Industries and is expected to generate 1.24 times more return on investment than Bonus Biogroup. However, Clal Industries is 1.24 times more volatile than Bonus Biogroup. It trades about 0.18 of its potential returns per unit of risk. Bonus Biogroup is currently generating about -0.26 per unit of risk. If you would invest  180,100  in Clal Industries and on September 3, 2024 and sell it today you would earn a total of  37,800  from holding Clal Industries and or generate 20.99% return on investment over 90 days.

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

Clal Industries and  vs.  Bonus Biogroup

Clal Industries

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Industries and are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clal Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Bonus Biogroup

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bonus Biogroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Clal Industries and Bonus Biogroup

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

The idea behind Clal Industries and and Bonus Biogroup 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.