Correlation Between Biomedix Incubator and Elbit Imaging

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

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

Diversification Opportunities for Biomedix Incubator and Elbit Imaging

-0.51

Correlation Coefficient

Biomedix Incubator  Elbit Imaging

Excellent diversification

The 3 months correlation between Biomedix and Elbit is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Biomedix Incubator and Elbit Imaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Imaging and Biomedix Incubator 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 Biomedix Incubator are associated (or correlated) with Elbit Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Imaging has no effect on the direction of Biomedix Incubator i.e., Biomedix Incubator and Elbit Imaging go up and down completely randomly.

Pair Corralation between Biomedix Incubator and Elbit Imaging

Assuming the 90 days trading horizon Biomedix Incubator is expected to generate 2.35 times more return on investment than Elbit Imaging. However, Biomedix Incubator is 2.35 times more volatile than Elbit Imaging. It trades about 0.2 of its potential returns per unit of risk. Elbit Imaging is currently generating about 0.02 per unit of risk. If you would invest  1,140,000  in Biomedix Incubator on February 28, 2024 and sell it today you would earn a total of  769,000  from holding Biomedix Incubator or generate 67.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.87%
Values	Daily Returns

Biomedix Incubator  vs.  Elbit Imaging

Biomedix Incubator

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biomedix Incubator are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Biomedix Incubator sustained solid returns over the last few months and may actually be approaching a breakup point.

Elbit Imaging

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Imaging are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Elbit Imaging is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Biomedix Incubator and Elbit Imaging

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

The idea behind Biomedix Incubator and Elbit Imaging 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.