Correlation Between Israel China and Internet Gold

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

Diversification Opportunities for Israel China and Internet Gold

0.37

Correlation Coefficient

Israel China  Internet Gold

Weak diversification

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

Pair Corralation between Israel China and Internet Gold

Assuming the 90 days trading horizon Israel China Biotechnology is expected to generate 1.07 times more return on investment than Internet Gold. However, Israel China is 1.07 times more volatile than Internet Gold Golden. It trades about -0.02 of its potential returns per unit of risk. Internet Gold Golden is currently generating about -0.1 per unit of risk. If you would invest  46,800  in Israel China Biotechnology on December 30, 2024 and sell it today you would lose (7,330) from holding Israel China Biotechnology or give up 15.66% 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.  Internet Gold Golden

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.

Internet Gold Golden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Internet Gold Golden 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Israel China and Internet Gold

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

The idea behind Israel China Biotechnology and Internet Gold Golden 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.