Correlation Between Israel China and Nice
Can any of the company-specific risk be diversified away by investing in both Israel China and Nice 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 Israel China and Nice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel China Biotechnology and Nice, you can compare the effects of market volatilities on Israel China and Nice 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 Israel China with a short position of Nice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel China and Nice.
Diversification Opportunities for Israel China and Nice
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Israel and Nice is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Israel China Biotechnology and Nice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice and Israel China 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 Israel China Biotechnology are associated (or correlated) with Nice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice has no effect on the direction of Israel China i.e., Israel China and Nice go up and down completely randomly.
Pair Corralation between Israel China and Nice
Assuming the 90 days trading horizon Israel China Biotechnology is expected to generate 18.47 times more return on investment than Nice. However, Israel China is 18.47 times more volatile than Nice. It trades about 0.12 of its potential returns per unit of risk. Nice is currently generating about -0.39 per unit of risk. If you would invest 64,050 in Israel China Biotechnology on January 25, 2024 and sell it today you would earn a total of 12,950 from holding Israel China Biotechnology or generate 20.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel China Biotechnology vs. Nice
Performance |
| Timeline |
| Israel China Biotech |
| Nice |
Israel China and Nice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel China and Nice
The main advantage of trading using opposite Israel China and Nice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel China position performs unexpectedly, Nice 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 Nice will offset losses from the drop in Nice's long position.| Israel China vs. Wesure Global Tech | Israel China vs. Blender Financial Technologies | Israel China vs. Dan Hotels | Israel China vs. Global Knafaim Leasing |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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