Correlation Between Israel Land and Ilex Medical

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

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

Diversification Opportunities for Israel Land and Ilex Medical

0.19

Correlation Coefficient

Israel Land  Ilex Medical

Average diversification

The 3 months correlation between Israel and Ilex is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Israel Land Development and Ilex Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilex Medical and Israel Land 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 Land Development are associated (or correlated) with Ilex Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilex Medical has no effect on the direction of Israel Land i.e., Israel Land and Ilex Medical go up and down completely randomly.

Pair Corralation between Israel Land and Ilex Medical

Assuming the 90 days trading horizon Israel Land Development is expected to generate 0.85 times more return on investment than Ilex Medical. However, Israel Land Development is 1.18 times less risky than Ilex Medical. It trades about -0.09 of its potential returns per unit of risk. Ilex Medical is currently generating about -0.1 per unit of risk. If you would invest  76,100  in Israel Land Development on December 30, 2024 and sell it today you would lose (6,690) from holding Israel Land Development or give up 8.79% of portfolio value over 90 days.

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

Israel Land Development  vs.  Ilex Medical

Israel Land Development

Risk-Adjusted Performance

Very Weak

Over the last 90 days Israel Land Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ilex Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ilex Medical 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 Land and Ilex Medical

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

The idea behind Israel Land Development and Ilex Medical 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.