Correlation Between Israel China and Iargento

Can any of the company-specific risk be diversified away by investing in both Israel China and Iargento 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 Iargento 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 Iargento Hi Tech, you can compare the effects of market volatilities on Israel China and Iargento 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 Iargento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel China and Iargento.

Diversification Opportunities for Israel China and Iargento

0.37

Correlation Coefficient

Israel China  Iargento

Weak diversification

The 3 months correlation between Israel and Iargento is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Israel China Biotechnology and Iargento Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iargento Hi Tech 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 Iargento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iargento Hi Tech has no effect on the direction of Israel China i.e., Israel China and Iargento go up and down completely randomly.

Pair Corralation between Israel China and Iargento

Assuming the 90 days trading horizon Israel China Biotechnology is expected to under-perform the Iargento. In addition to that, Israel China is 1.05 times more volatile than Iargento Hi Tech. It trades about -0.08 of its total potential returns per unit of risk. Iargento Hi Tech is currently generating about -0.02 per unit of volatility. If you would invest  9,250  in Iargento Hi Tech on September 3, 2024 and sell it today you would lose (630.00) from holding Iargento Hi Tech or give up 6.81% of portfolio value over 90 days.

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

Israel China Biotechnology  vs.  Iargento Hi Tech

Israel China Biotech

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Iargento Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Israel China and Iargento

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

The idea behind Israel China Biotechnology and Iargento Hi Tech 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.