Correlation Between Protalix Biotherapeutics and ODDITY Tech

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

By analyzing existing cross correlation between Protalix Biotherapeutics and ODDITY Tech Ltd, you can compare the effects of market volatilities on Protalix Biotherapeutics and ODDITY Tech 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 ODDITY Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Protalix Biotherapeutics and ODDITY Tech.

Diversification Opportunities for Protalix Biotherapeutics and ODDITY Tech

0.78

Correlation Coefficient

Protalix Biotherapeutics  ODDITY Tech

Poor diversification

The 3 months correlation between Protalix and ODDITY is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Protalix Biotherapeutics and ODDITY Tech Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ODDITY Tech 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 ODDITY Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ODDITY Tech has no effect on the direction of Protalix Biotherapeutics i.e., Protalix Biotherapeutics and ODDITY Tech go up and down completely randomly.

Pair Corralation between Protalix Biotherapeutics and ODDITY Tech

Considering the 90-day investment horizon Protalix Biotherapeutics is expected to generate 0.69 times more return on investment than ODDITY Tech. However, Protalix Biotherapeutics is 1.45 times less risky than ODDITY Tech. It trades about 0.04 of its potential returns per unit of risk. ODDITY Tech Ltd is currently generating about -0.11 per unit of risk. If you would invest  171.00  in Protalix Biotherapeutics on September 25, 2024 and sell it today you would earn a total of  2.00  from holding Protalix Biotherapeutics or generate 1.17% return on investment over 90 days.

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

Protalix Biotherapeutics  vs.  ODDITY Tech Ltd

Protalix Biotherapeutics

Risk-Adjusted Performance

15 of 100

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.

ODDITY Tech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ODDITY Tech Ltd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ODDITY Tech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Protalix Biotherapeutics and ODDITY Tech

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

The idea behind Protalix Biotherapeutics and ODDITY Tech Ltd 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 CEOs Directory module to screen CEOs from public companies around the world.