Correlation Between Clal Insurance and Opko Health

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

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

Diversification Opportunities for Clal Insurance and Opko Health

-0.11

Correlation Coefficient

Clal Insurance  Opko Health

Good diversification

The 3 months correlation between Clal and Opko is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Opko Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opko Health and Clal Insurance 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 Insurance Enterprises are associated (or correlated) with Opko Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opko Health has no effect on the direction of Clal Insurance i.e., Clal Insurance and Opko Health go up and down completely randomly.

Pair Corralation between Clal Insurance and Opko Health

Assuming the 90 days trading horizon Clal Insurance Enterprises is expected to generate 0.53 times more return on investment than Opko Health. However, Clal Insurance Enterprises is 1.87 times less risky than Opko Health. It trades about 0.46 of its potential returns per unit of risk. Opko Health is currently generating about 0.03 per unit of risk. If you would invest  558,417  in Clal Insurance Enterprises on September 21, 2024 and sell it today you would earn a total of  291,883  from holding Clal Insurance Enterprises or generate 52.27% return on investment over 90 days.

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

Clal Insurance Enterprises  vs.  Opko Health

Clal Insurance Enter

Risk-Adjusted Performance

36 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Insurance Enterprises are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clal Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Opko Health

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Opko Health are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward-looking signals, Opko Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Clal Insurance and Opko Health

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

The idea behind Clal Insurance Enterprises and Opko Health 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.