Correlation Between Pluristem and Priortech

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

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

Diversification Opportunities for Pluristem and Priortech

-0.28

Correlation Coefficient

Pluristem  Priortech

Very good diversification

The 3 months correlation between Pluristem and Priortech is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pluristem and Priortech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Priortech 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 Priortech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Priortech has no effect on the direction of Pluristem i.e., Pluristem and Priortech go up and down completely randomly.

Pair Corralation between Pluristem and Priortech

Assuming the 90 days trading horizon Pluristem is expected to generate 12.58 times more return on investment than Priortech. However, Pluristem is 12.58 times more volatile than Priortech. It trades about 0.05 of its potential returns per unit of risk. Priortech is currently generating about 0.1 per unit of risk. If you would invest  36,900  in Pluristem on September 27, 2024 and sell it today you would earn a total of  128,000  from holding Pluristem or generate 346.88% return on investment over 90 days.

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

Pluristem  vs.  Priortech

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.

Priortech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Priortech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Priortech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pluristem and Priortech

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

The idea behind Pluristem and Priortech 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.