Correlation Between BioLineRx and Protalix Biotherapeutics

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

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

Diversification Opportunities for BioLineRx and Protalix Biotherapeutics

-0.6

Correlation Coefficient

BioLineRx  Protalix Biotherapeutics

Excellent diversification

The 3 months correlation between BioLineRx and Protalix is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding BioLineRx and Protalix Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protalix Biotherapeutics and BioLineRx 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 BioLineRx are associated (or correlated) with Protalix Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protalix Biotherapeutics has no effect on the direction of BioLineRx i.e., BioLineRx and Protalix Biotherapeutics go up and down completely randomly.

Pair Corralation between BioLineRx and Protalix Biotherapeutics

Given the investment horizon of 90 days BioLineRx is expected to under-perform the Protalix Biotherapeutics. In addition to that, BioLineRx is 1.6 times more volatile than Protalix Biotherapeutics. It trades about -0.13 of its total potential returns per unit of risk. Protalix Biotherapeutics is currently generating about 0.19 per unit of volatility. If you would invest  107.00  in Protalix Biotherapeutics on August 31, 2024 and sell it today you would earn a total of  62.00  from holding Protalix Biotherapeutics or generate 57.94% return on investment over 90 days.

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

BioLineRx  vs.  Protalix Biotherapeutics

BioLineRx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioLineRx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Protalix Biotherapeutics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Protalix Biotherapeutics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Protalix Biotherapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioLineRx and Protalix Biotherapeutics

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

The idea behind BioLineRx and Protalix Biotherapeutics 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.