Correlation Between Pluristem and Aquarius Engines

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

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

Diversification Opportunities for Pluristem and Aquarius Engines

0.14

Correlation Coefficient

Pluristem  Aquarius Engines

Average diversification

The 3 months correlation between Pluristem and Aquarius is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Pluristem and Aquarius Engines AM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquarius Engines and Pluristem 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 Pluristem are associated (or correlated) with Aquarius Engines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquarius Engines has no effect on the direction of Pluristem i.e., Pluristem and Aquarius Engines go up and down completely randomly.

Pair Corralation between Pluristem and Aquarius Engines

Assuming the 90 days trading horizon Pluristem is expected to under-perform the Aquarius Engines. In addition to that, Pluristem is 1.03 times more volatile than Aquarius Engines AM. It trades about -0.13 of its total potential returns per unit of risk. Aquarius Engines AM is currently generating about 0.01 per unit of volatility. If you would invest  14,430  in Aquarius Engines AM on September 27, 2024 and sell it today you would lose (460.00) from holding Aquarius Engines AM or give up 3.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.83%
Values	Daily Returns

Pluristem  vs.  Aquarius Engines AM

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.

Aquarius Engines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquarius Engines AM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aquarius Engines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pluristem and Aquarius Engines

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

The idea behind Pluristem and Aquarius Engines AM 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.