Correlation Between Isras Investment and Clal Biotechnology

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

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

Diversification Opportunities for Isras Investment and Clal Biotechnology

-0.74

Correlation Coefficient

Isras Investment  Clal Biotechnology

Pay attention - limited upside

The 3 months correlation between Isras and Clal is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Isras Investment and Clal Biotechnology Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Biotechnology and Isras Investment 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 Isras Investment are associated (or correlated) with Clal Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Biotechnology has no effect on the direction of Isras Investment i.e., Isras Investment and Clal Biotechnology go up and down completely randomly.

Pair Corralation between Isras Investment and Clal Biotechnology

Assuming the 90 days trading horizon Isras Investment is expected to generate 0.45 times more return on investment than Clal Biotechnology. However, Isras Investment is 2.23 times less risky than Clal Biotechnology. It trades about 0.07 of its potential returns per unit of risk. Clal Biotechnology Industries is currently generating about -0.02 per unit of risk. If you would invest  6,059,727  in Isras Investment on October 22, 2024 and sell it today you would earn a total of  2,988,273  from holding Isras Investment or generate 49.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.74%
Values	Daily Returns

Isras Investment  vs.  Clal Biotechnology Industries

Isras Investment

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Isras Investment are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Isras Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Clal Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Isras Investment and Clal Biotechnology

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

The idea behind Isras Investment and Clal Biotechnology Industries 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.