Correlation Between Ilex Medical and Elbit Medical

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

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

Diversification Opportunities for Ilex Medical and Elbit Medical

-0.19

Correlation Coefficient

Ilex Medical  Elbit Medical

Good diversification

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

Pair Corralation between Ilex Medical and Elbit Medical

Assuming the 90 days trading horizon Ilex Medical is expected to generate 0.6 times more return on investment than Elbit Medical. However, Ilex Medical is 1.68 times less risky than Elbit Medical. It trades about 0.26 of its potential returns per unit of risk. Elbit Medical Technologies is currently generating about 0.01 per unit of risk. If you would invest  635,500  in Ilex Medical on September 16, 2024 and sell it today you would earn a total of  186,600  from holding Ilex Medical or generate 29.36% return on investment over 90 days.

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

Ilex Medical  vs.  Elbit Medical Technologies

Ilex Medical

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ilex Medical are ranked lower than 20 (%) 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.

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.

Pair Trading with Ilex Medical and Elbit Medical

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

The idea behind Ilex Medical and Elbit Medical Technologies 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.