Correlation Between Pluristem and Reit 1

Can any of the company-specific risk be diversified away by investing in both Pluristem and Reit 1 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 Reit 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pluristem and Reit 1, you can compare the effects of market volatilities on Pluristem and Reit 1 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 Reit 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pluristem and Reit 1.

Diversification Opportunities for Pluristem and Reit 1

-0.58

Correlation Coefficient

Pluristem  Reit 1

Excellent diversification

The 3 months correlation between Pluristem and Reit is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pluristem and Reit 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reit 1 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 Reit 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reit 1 has no effect on the direction of Pluristem i.e., Pluristem and Reit 1 go up and down completely randomly.

Pair Corralation between Pluristem and Reit 1

Assuming the 90 days trading horizon Pluristem is expected to under-perform the Reit 1. In addition to that, Pluristem is 1.6 times more volatile than Reit 1. It trades about -0.13 of its total potential returns per unit of risk. Reit 1 is currently generating about 0.05 per unit of volatility. If you would invest  189,500  in Reit 1 on December 1, 2024 and sell it today you would earn a total of  6,900  from holding Reit 1 or generate 3.64% return on investment over 90 days.

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

Pluristem  vs.  Reit 1

Pluristem

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pluristem 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.

Reit 1

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Reit 1 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Reit 1 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pluristem and Reit 1

The main advantage of trading using opposite Pluristem and Reit 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pluristem position performs unexpectedly, Reit 1 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 Reit 1 will offset losses from the drop in Reit 1's long position.

The idea behind Pluristem and Reit 1 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.