Correlation Between Rami Levi and Clal Biotechnology

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

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

Diversification Opportunities for Rami Levi and Clal Biotechnology

-0.71

Correlation Coefficient

Rami Levi  Clal Biotechnology

Pay attention - limited upside

The 3 months correlation between Rami and Clal is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Rami Levi and Clal Biotechnology Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Biotechnology and Rami Levi 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 Rami Levi 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 Rami Levi i.e., Rami Levi and Clal Biotechnology go up and down completely randomly.

Pair Corralation between Rami Levi and Clal Biotechnology

Assuming the 90 days trading horizon Rami Levi is expected to generate 0.5 times more return on investment than Clal Biotechnology. However, Rami Levi is 1.98 times less risky than Clal Biotechnology. It trades about 0.25 of its potential returns per unit of risk. Clal Biotechnology Industries is currently generating about -0.08 per unit of risk. If you would invest  2,102,345  in Rami Levi on September 13, 2024 and sell it today you would earn a total of  345,655  from holding Rami Levi or generate 16.44% return on investment over 90 days.

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

Rami Levi  vs.  Clal Biotechnology Industries

Rami Levi

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rami Levi are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rami Levi 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 weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Rami Levi and Clal Biotechnology

The main advantage of trading using opposite Rami Levi and Clal Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rami Levi 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 Rami Levi 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 CEOs Directory module to screen CEOs from public companies around the world.