Correlation Between Elbit Medical and Ilex Medical

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

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

Diversification Opportunities for Elbit Medical and Ilex Medical

-0.19

Correlation Coefficient

Elbit Medical  Ilex Medical

Good diversification

The 3 months correlation between Elbit and Ilex is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Medical Technologies and Ilex Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilex Medical and Elbit Medical 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 Elbit Medical Technologies are associated (or correlated) with Ilex Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilex Medical has no effect on the direction of Elbit Medical i.e., Elbit Medical and Ilex Medical go up and down completely randomly.

Pair Corralation between Elbit Medical and Ilex Medical

Assuming the 90 days trading horizon Elbit Medical is expected to generate 11.46 times less return on investment than Ilex Medical. In addition to that, Elbit Medical is 1.71 times more volatile than Ilex Medical. It trades about 0.01 of its total potential returns per unit of risk. Ilex Medical is currently generating about 0.29 per unit of volatility. If you would invest  620,000  in Ilex Medical on September 17, 2024 and sell it today you would earn a total of  202,100  from holding Ilex Medical or generate 32.6% return on investment over 90 days.

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

Elbit Medical Technologies  vs.  Ilex Medical

Elbit Medical Techno

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Medical Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Elbit Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ilex Medical

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ilex Medical are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ilex Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elbit Medical and Ilex Medical

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

The idea behind Elbit Medical Technologies and Ilex Medical 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.