Correlation Between Protalix Biotherapeutics and Orchestra BioMed

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

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

Diversification Opportunities for Protalix Biotherapeutics and Orchestra BioMed

0.24

Correlation Coefficient

Protalix Biotherapeutics  Orchestra BioMed

Modest diversification

The 3 months correlation between Protalix and Orchestra is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Protalix Biotherapeutics and Orchestra BioMed Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchestra BioMed Holdings and Protalix Biotherapeutics 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 Protalix Biotherapeutics are associated (or correlated) with Orchestra BioMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchestra BioMed Holdings has no effect on the direction of Protalix Biotherapeutics i.e., Protalix Biotherapeutics and Orchestra BioMed go up and down completely randomly.

Pair Corralation between Protalix Biotherapeutics and Orchestra BioMed

Considering the 90-day investment horizon Protalix Biotherapeutics is expected to generate 0.48 times more return on investment than Orchestra BioMed. However, Protalix Biotherapeutics is 2.07 times less risky than Orchestra BioMed. It trades about 0.2 of its potential returns per unit of risk. Orchestra BioMed Holdings is currently generating about -0.05 per unit of risk. If you would invest  164.00  in Protalix Biotherapeutics on December 3, 2024 and sell it today you would earn a total of  67.00  from holding Protalix Biotherapeutics or generate 40.85% return on investment over 90 days.

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

Protalix Biotherapeutics  vs.  Orchestra BioMed Holdings

Protalix Biotherapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Protalix Biotherapeutics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Protalix Biotherapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Orchestra BioMed Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orchestra BioMed Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Protalix Biotherapeutics and Orchestra BioMed

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

The idea behind Protalix Biotherapeutics and Orchestra BioMed Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.