Correlation Between Israel China and Bonus Biogroup

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

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

Diversification Opportunities for Israel China and Bonus Biogroup

0.26

Correlation Coefficient

Israel China  Bonus Biogroup

Modest diversification

The 3 months correlation between Israel and Bonus is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Israel China Biotechnology and Bonus Biogroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonus Biogroup and Israel China 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 Israel China Biotechnology are associated (or correlated) with Bonus Biogroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonus Biogroup has no effect on the direction of Israel China i.e., Israel China and Bonus Biogroup go up and down completely randomly.

Pair Corralation between Israel China and Bonus Biogroup

Assuming the 90 days trading horizon Israel China Biotechnology is expected to under-perform the Bonus Biogroup. But the stock apears to be less risky and, when comparing its historical volatility, Israel China Biotechnology is 1.09 times less risky than Bonus Biogroup. The stock trades about -0.02 of its potential returns per unit of risk. The Bonus Biogroup is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,090  in Bonus Biogroup on December 30, 2024 and sell it today you would earn a total of  650.00  from holding Bonus Biogroup or generate 59.63% return on investment over 90 days.

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

Israel China Biotechnology  vs.  Bonus Biogroup

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 latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bonus Biogroup

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bonus Biogroup are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bonus Biogroup sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Israel China and Bonus Biogroup

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

The idea behind Israel China Biotechnology and Bonus Biogroup 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.