Correlation Between Clal Insurance and Purple Biotech

Can any of the company-specific risk be diversified away by investing in both Clal Insurance and Purple Biotech 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 Purple Biotech 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 Purple Biotech, you can compare the effects of market volatilities on Clal Insurance and Purple Biotech 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 Purple Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and Purple Biotech.

Diversification Opportunities for Clal Insurance and Purple Biotech

-0.75

Correlation Coefficient

Clal Insurance  Purple Biotech

Pay attention - limited upside

The 3 months correlation between Clal and Purple is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Purple Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purple Biotech 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 Purple Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purple Biotech has no effect on the direction of Clal Insurance i.e., Clal Insurance and Purple Biotech go up and down completely randomly.

Pair Corralation between Clal Insurance and Purple Biotech

Assuming the 90 days trading horizon Clal Insurance Enterprises is expected to generate 0.22 times more return on investment than Purple Biotech. However, Clal Insurance Enterprises is 4.62 times less risky than Purple Biotech. It trades about 0.12 of its potential returns per unit of risk. Purple Biotech is currently generating about -0.05 per unit of risk. If you would invest  563,441  in Clal Insurance Enterprises on September 14, 2024 and sell it today you would earn a total of  296,559  from holding Clal Insurance Enterprises or generate 52.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.48%
Values	Daily Returns

Clal Insurance Enterprises  vs.  Purple Biotech

Clal Insurance Enter

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Insurance Enterprises are ranked lower than 34 (%) 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.

Purple Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Purple Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Clal Insurance and Purple Biotech

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

The idea behind Clal Insurance Enterprises and Purple Biotech 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.