Correlation Between Infimer and Pluristem

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

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

Diversification Opportunities for Infimer and Pluristem

-0.1

Correlation Coefficient

Infimer  Pluristem

Good diversification

The 3 months correlation between Infimer and Pluristem is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Infimer and Pluristem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pluristem and Infimer 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 Infimer are associated (or correlated) with Pluristem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pluristem has no effect on the direction of Infimer i.e., Infimer and Pluristem go up and down completely randomly.

Pair Corralation between Infimer and Pluristem

Assuming the 90 days trading horizon Infimer is expected to generate 67.04 times more return on investment than Pluristem. However, Infimer is 67.04 times more volatile than Pluristem. It trades about 0.33 of its potential returns per unit of risk. Pluristem is currently generating about -0.13 per unit of risk. If you would invest  2,500,000  in Infimer on September 27, 2024 and sell it today you would lose (1,520,000) from holding Infimer or give up 60.8% of portfolio value over 90 days.

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

Infimer  vs.  Pluristem

Infimer

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Infimer are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Infimer sustained solid returns over the last few months and may actually be approaching a breakup point.

Pluristem

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pluristem 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 Infimer and Pluristem

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

The idea behind Infimer and Pluristem 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.