Correlation Between IBI Mutual and Clal Biotechnology

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

By analyzing existing cross correlation between IBI Mutual Funds and Clal Biotechnology Industries, you can compare the effects of market volatilities on IBI Mutual and Clal Biotechnology 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 IBI Mutual with a short position of Clal Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBI Mutual and Clal Biotechnology.

Diversification Opportunities for IBI Mutual and Clal Biotechnology

0.54

Correlation Coefficient

IBI Mutual  Clal Biotechnology

Very weak diversification

The 3 months correlation between IBI and Clal is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding IBI Mutual Funds and Clal Biotechnology Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Biotechnology and IBI Mutual 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 IBI Mutual Funds are associated (or correlated) with Clal Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Biotechnology has no effect on the direction of IBI Mutual i.e., IBI Mutual and Clal Biotechnology go up and down completely randomly.

Pair Corralation between IBI Mutual and Clal Biotechnology

Assuming the 90 days trading horizon IBI Mutual Funds is expected to under-perform the Clal Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, IBI Mutual Funds is 1.06 times less risky than Clal Biotechnology. The stock trades about -0.03 of its potential returns per unit of risk. The Clal Biotechnology Industries is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,570  in Clal Biotechnology Industries on December 2, 2024 and sell it today you would lose (10.00) from holding Clal Biotechnology Industries or give up 0.28% of portfolio value over 90 days.

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

IBI Mutual Funds  vs.  Clal Biotechnology Industries

IBI Mutual Funds

Risk-Adjusted Performance

Very Weak

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

Clal Biotechnology

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IBI Mutual and Clal Biotechnology

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

The idea behind IBI Mutual Funds and Clal Biotechnology Industries 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.