Correlation Between Clal Biotechnology and ICL Israel
Can any of the company-specific risk be diversified away by investing in both Clal Biotechnology and ICL Israel 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 Clal Biotechnology and ICL Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clal Biotechnology Industries and ICL Israel Chemicals, you can compare the effects of market volatilities on Clal Biotechnology and ICL Israel 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 Clal Biotechnology with a short position of ICL Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Biotechnology and ICL Israel.
Diversification Opportunities for Clal Biotechnology and ICL Israel
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clal and ICL is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Clal Biotechnology Industries and ICL Israel Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICL Israel Chemicals and Clal Biotechnology 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 Clal Biotechnology Industries are associated (or correlated) with ICL Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICL Israel Chemicals has no effect on the direction of Clal Biotechnology i.e., Clal Biotechnology and ICL Israel go up and down completely randomly.
Pair Corralation between Clal Biotechnology and ICL Israel
Assuming the 90 days trading horizon Clal Biotechnology Industries is expected to generate 1.58 times more return on investment than ICL Israel. However, Clal Biotechnology is 1.58 times more volatile than ICL Israel Chemicals. It trades about 0.06 of its potential returns per unit of risk. ICL Israel Chemicals is currently generating about -0.27 per unit of risk. If you would invest 4,390 in Clal Biotechnology Industries on January 25, 2024 and sell it today you would earn a total of 110.00 from holding Clal Biotechnology Industries or generate 2.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Clal Biotechnology Industries vs. ICL Israel Chemicals
Performance |
Timeline |
Clal Biotechnology |
ICL Israel Chemicals |
Clal Biotechnology and ICL Israel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Clal Biotechnology and ICL Israel
The main advantage of trading using opposite Clal Biotechnology and ICL Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Biotechnology position performs unexpectedly, ICL Israel 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 ICL Israel will offset losses from the drop in ICL Israel's long position.Clal Biotechnology vs. Bonus Biogroup | Clal Biotechnology vs. Compugen | Clal Biotechnology vs. Matricelf |
ICL Israel vs. Neto ME Holdings | ICL Israel vs. Aryt Industries | ICL Israel vs. Kerur Holdings | ICL Israel vs. Globrands Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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