Correlation Between Delek and Lineage Cell

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

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

Diversification Opportunities for Delek and Lineage Cell

-0.81

Correlation Coefficient

Delek  Lineage Cell

Pay attention - limited upside

The 3 months correlation between Delek and Lineage is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Lineage Cell Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lineage Cell Therapeutics and Delek 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 Delek Group are associated (or correlated) with Lineage Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lineage Cell Therapeutics has no effect on the direction of Delek i.e., Delek and Lineage Cell go up and down completely randomly.

Pair Corralation between Delek and Lineage Cell

Assuming the 90 days trading horizon Delek Group is expected to generate 0.32 times more return on investment than Lineage Cell. However, Delek Group is 3.09 times less risky than Lineage Cell. It trades about 0.29 of its potential returns per unit of risk. Lineage Cell Therapeutics is currently generating about 0.01 per unit of risk. If you would invest  4,754,000  in Delek Group on October 9, 2024 and sell it today you would earn a total of  474,000  from holding Delek Group or generate 9.97% return on investment over 90 days.

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

Delek Group  vs.  Lineage Cell Therapeutics

Delek Group

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Delek unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lineage Cell Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lineage Cell Therapeutics 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Delek and Lineage Cell

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

The idea behind Delek Group and Lineage Cell Therapeutics 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.