Correlation Between Dan Hotels and Pluristem

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

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

Diversification Opportunities for Dan Hotels and Pluristem

0.34

Correlation Coefficient

Dan Hotels  Pluristem

Weak diversification

The 3 months correlation between Dan and Pluristem is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dan Hotels and Pluristem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pluristem and Dan Hotels 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 Dan Hotels 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 Dan Hotels i.e., Dan Hotels and Pluristem go up and down completely randomly.

Pair Corralation between Dan Hotels and Pluristem

Assuming the 90 days trading horizon Dan Hotels is expected to generate 0.34 times more return on investment than Pluristem. However, Dan Hotels is 2.93 times less risky than Pluristem. It trades about 0.01 of its potential returns per unit of risk. Pluristem is currently generating about 0.0 per unit of risk. If you would invest  246,000  in Dan Hotels on September 12, 2024 and sell it today you would earn a total of  1,000.00  from holding Dan Hotels or generate 0.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.83%
Values	Daily Returns

Dan Hotels  vs.  Pluristem

Dan Hotels

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dan Hotels are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dan Hotels 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

0 of 100

Very Weak

Over the last 90 days Pluristem has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Dan Hotels and Pluristem

The main advantage of trading using opposite Dan Hotels and Pluristem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dan Hotels 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 Dan Hotels 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.