Correlation Between Elbit Medical and Photomyne

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

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

Diversification Opportunities for Elbit Medical and Photomyne

-0.14

Correlation Coefficient

Elbit Medical  Photomyne

Good diversification

The 3 months correlation between Elbit and Photomyne is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Medical Technologies and Photomyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photomyne and Elbit Medical 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 Elbit Medical Technologies are associated (or correlated) with Photomyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photomyne has no effect on the direction of Elbit Medical i.e., Elbit Medical and Photomyne go up and down completely randomly.

Pair Corralation between Elbit Medical and Photomyne

Assuming the 90 days trading horizon Elbit Medical Technologies is expected to generate 4.32 times more return on investment than Photomyne. However, Elbit Medical is 4.32 times more volatile than Photomyne. It trades about 0.05 of its potential returns per unit of risk. Photomyne is currently generating about 0.2 per unit of risk. If you would invest  2,330  in Elbit Medical Technologies on November 20, 2024 and sell it today you would earn a total of  140.00  from holding Elbit Medical Technologies or generate 6.01% return on investment over 90 days.

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

Elbit Medical Technologies  vs.  Photomyne

Elbit Medical Techno

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Medical Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Elbit Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Photomyne

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Photomyne are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Photomyne sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elbit Medical and Photomyne

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

The idea behind Elbit Medical Technologies and Photomyne 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.