Correlation Between C Mer and Israel China

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both C Mer and Israel China 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 C Mer and Israel China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between C Mer Industries and Israel China Biotechnology, you can compare the effects of market volatilities on C Mer and Israel China 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 C Mer with a short position of Israel China. Check out your portfolio center. Please also check ongoing floating volatility patterns of C Mer and Israel China.

Diversification Opportunities for C Mer and Israel China

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between CMER and Israel is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding C Mer Industries and Israel China Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel China Biotech and C Mer 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 C Mer Industries are associated (or correlated) with Israel China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel China Biotech has no effect on the direction of C Mer i.e., C Mer and Israel China go up and down completely randomly.

Pair Corralation between C Mer and Israel China

Assuming the 90 days trading horizon C Mer Industries is expected to generate 1.07 times more return on investment than Israel China. However, C Mer is 1.07 times more volatile than Israel China Biotechnology. It trades about 0.25 of its potential returns per unit of risk. Israel China Biotechnology is currently generating about -0.06 per unit of risk. If you would invest  171,600  in C Mer Industries on September 18, 2024 and sell it today you would earn a total of  95,400  from holding C Mer Industries or generate 55.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy97.83%
ValuesDaily Returns

C Mer Industries  vs.  Israel China Biotechnology

 Performance 
       Timeline  
C Mer Industries 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in C Mer Industries are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, C Mer sustained solid returns over the last few months and may actually be approaching a breakup point.
Israel China Biotech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Israel China Biotechnology 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 fundamental drivers 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.

C Mer and Israel China Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with C Mer and Israel China

The main advantage of trading using opposite C Mer and Israel China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C Mer position performs unexpectedly, Israel China 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 Israel China will offset losses from the drop in Israel China's long position.
The idea behind C Mer Industries and Israel China Biotechnology 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

Other Complementary Tools

Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Equity Valuation
Check real value of public entities based on technical and fundamental data
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk