Correlation Between ICL Israel and Yield10 Bioscience

Can any of the company-specific risk be diversified away by investing in both ICL Israel and Yield10 Bioscience 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 ICL Israel and Yield10 Bioscience into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ICL Israel Chemicals and Yield10 Bioscience, you can compare the effects of market volatilities on ICL Israel and Yield10 Bioscience 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 ICL Israel with a short position of Yield10 Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Yield10 Bioscience.

Diversification Opportunities for ICL Israel and Yield10 Bioscience

-0.52

Correlation Coefficient

ICL Israel  Yield10 Bioscience

Excellent diversification

The 3 months correlation between ICL and Yield10 is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Yield10 Bioscience in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yield10 Bioscience and ICL Israel 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 ICL Israel Chemicals are associated (or correlated) with Yield10 Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yield10 Bioscience has no effect on the direction of ICL Israel i.e., ICL Israel and Yield10 Bioscience go up and down completely randomly.

Pair Corralation between ICL Israel and Yield10 Bioscience

Considering the 90-day investment horizon ICL Israel Chemicals is expected to under-perform the Yield10 Bioscience. But the stock apears to be less risky and, when comparing its historical volatility, ICL Israel Chemicals is 3.18 times less risky than Yield10 Bioscience. The stock trades about -0.03 of its potential returns per unit of risk. The Yield10 Bioscience is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  166.00  in Yield10 Bioscience on September 1, 2024 and sell it today you would earn a total of  24.00  from holding Yield10 Bioscience or generate 14.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	31.11%
Values	Daily Returns

ICL Israel Chemicals  vs.  Yield10 Bioscience

ICL Israel Chemicals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICL Israel Chemicals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental indicators, ICL Israel may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Yield10 Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yield10 Bioscience has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Yield10 Bioscience is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ICL Israel and Yield10 Bioscience

The main advantage of trading using opposite ICL Israel and Yield10 Bioscience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Yield10 Bioscience 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 Yield10 Bioscience will offset losses from the drop in Yield10 Bioscience's long position.

The idea behind ICL Israel Chemicals and Yield10 Bioscience 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.