Correlation Between Pluristem and Emilia Devel

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

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

Diversification Opportunities for Pluristem and Emilia Devel

-0.34

Correlation Coefficient

Pluristem  Emilia Devel

Very good diversification

The 3 months correlation between Pluristem and Emilia is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pluristem and Emilia Devel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emilia Devel and Pluristem 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 Pluristem are associated (or correlated) with Emilia Devel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emilia Devel has no effect on the direction of Pluristem i.e., Pluristem and Emilia Devel go up and down completely randomly.

Pair Corralation between Pluristem and Emilia Devel

Assuming the 90 days trading horizon Pluristem is expected to under-perform the Emilia Devel. In addition to that, Pluristem is 2.3 times more volatile than Emilia Devel. It trades about -0.03 of its total potential returns per unit of risk. Emilia Devel is currently generating about 0.29 per unit of volatility. If you would invest  201,900  in Emilia Devel on September 14, 2024 and sell it today you would earn a total of  62,500  from holding Emilia Devel or generate 30.96% return on investment over 90 days.

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

Pluristem  vs.  Emilia Devel

Pluristem

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pluristem 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.

Emilia Devel

Risk-Adjusted Performance

22 of 100

Solid

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

Pair Trading with Pluristem and Emilia Devel

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

The idea behind Pluristem and Emilia Devel 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.