Correlation Between Ilex Medical and Lapidoth

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

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

Diversification Opportunities for Ilex Medical and Lapidoth

0.18

Correlation Coefficient

Ilex Medical  Lapidoth

Average diversification

The 3 months correlation between Ilex and Lapidoth is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ilex Medical and Lapidoth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lapidoth and Ilex Medical 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 Ilex Medical are associated (or correlated) with Lapidoth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lapidoth has no effect on the direction of Ilex Medical i.e., Ilex Medical and Lapidoth go up and down completely randomly.

Pair Corralation between Ilex Medical and Lapidoth

Assuming the 90 days trading horizon Ilex Medical is expected to generate 0.97 times more return on investment than Lapidoth. However, Ilex Medical is 1.03 times less risky than Lapidoth. It trades about -0.1 of its potential returns per unit of risk. Lapidoth is currently generating about -0.11 per unit of risk. If you would invest  742,300  in Ilex Medical on December 30, 2024 and sell it today you would lose (85,000) from holding Ilex Medical or give up 11.45% of portfolio value over 90 days.

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

Ilex Medical  vs.  Lapidoth

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.

Lapidoth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lapidoth 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 Ilex Medical and Lapidoth

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

The idea behind Ilex Medical and Lapidoth 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.