Correlation Between Spuntech and Elbit Medical

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

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

Diversification Opportunities for Spuntech and Elbit Medical

0.19

Correlation Coefficient

Spuntech  Elbit Medical

Average diversification

The 3 months correlation between Spuntech and Elbit is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Spuntech 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 Spuntech 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 Spuntech 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 Spuntech i.e., Spuntech and Elbit Medical go up and down completely randomly.

Pair Corralation between Spuntech and Elbit Medical

Assuming the 90 days trading horizon Spuntech is expected to generate 1.39 times more return on investment than Elbit Medical. However, Spuntech is 1.39 times more volatile than Elbit Medical Technologies. It trades about -0.05 of its potential returns per unit of risk. Elbit Medical Technologies is currently generating about -0.57 per unit of risk. If you would invest  45,850  in Spuntech on September 15, 2024 and sell it today you would lose (3,160) from holding Spuntech or give up 6.89% of portfolio value over 90 days.

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

Spuntech  vs.  Elbit Medical Technologies

Spuntech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spuntech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Spuntech is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 Spuntech and Elbit Medical

The main advantage of trading using opposite Spuntech and Elbit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spuntech 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 Spuntech 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.