Correlation Between YH Dimri and Israel China

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

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

Diversification Opportunities for YH Dimri and Israel China

-0.13

Correlation Coefficient

YH Dimri  Israel China

Good diversification

The 3 months correlation between DIMRI and Israel is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding YH Dimri Construction and Israel China Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel China Biotech and YH Dimri 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 YH Dimri Construction are associated (or correlated) with Israel China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel China Biotech has no effect on the direction of YH Dimri i.e., YH Dimri and Israel China go up and down completely randomly.

Pair Corralation between YH Dimri and Israel China

Assuming the 90 days trading horizon YH Dimri Construction is expected to under-perform the Israel China. But the stock apears to be less risky and, when comparing its historical volatility, YH Dimri Construction is 3.95 times less risky than Israel China. The stock trades about -0.06 of its potential returns per unit of risk. The Israel China Biotechnology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  59,400  in Israel China Biotechnology on December 1, 2024 and sell it today you would lose (8,400) from holding Israel China Biotechnology or give up 14.14% of portfolio value over 90 days.

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

YH Dimri Construction  vs.  Israel China Biotechnology

YH Dimri Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days YH Dimri Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, YH Dimri is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Israel China Biotech

Risk-Adjusted Performance

Very Weak

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

Pair Trading with YH Dimri and Israel China

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

The idea behind YH Dimri Construction and Israel China Biotechnology 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.