Correlation Between Cannabotech and Israel Land

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

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

Diversification Opportunities for Cannabotech and Israel Land

-0.52

Correlation Coefficient

Cannabotech  Israel Land

Excellent diversification

The 3 months correlation between Cannabotech and Israel is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cannabotech and Israel Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Land Development and Cannabotech 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 Cannabotech are associated (or correlated) with Israel Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Land Development has no effect on the direction of Cannabotech i.e., Cannabotech and Israel Land go up and down completely randomly.

Pair Corralation between Cannabotech and Israel Land

Assuming the 90 days trading horizon Cannabotech is expected to under-perform the Israel Land. In addition to that, Cannabotech is 2.11 times more volatile than Israel Land Development. It trades about -0.19 of its total potential returns per unit of risk. Israel Land Development is currently generating about 0.22 per unit of volatility. If you would invest  68,500  in Israel Land Development on September 13, 2024 and sell it today you would earn a total of  18,370  from holding Israel Land Development or generate 26.82% return on investment over 90 days.

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

Cannabotech  vs.  Israel Land Development

Cannabotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cannabotech 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.

Israel Land Development

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Land Development are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Israel Land sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cannabotech and Israel Land

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

The idea behind Cannabotech and Israel Land Development 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.