Correlation Between TAT Technologies and Israel China

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

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

Diversification Opportunities for TAT Technologies and Israel China

-0.57

Correlation Coefficient

TAT Technologies  Israel China

Excellent diversification

The 3 months correlation between TAT and Israel is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding TAT Technologies and Israel China Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel China Biotech and TAT Technologies 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 TAT Technologies are associated (or correlated) with Israel China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel China Biotech has no effect on the direction of TAT Technologies i.e., TAT Technologies and Israel China go up and down completely randomly.

Pair Corralation between TAT Technologies and Israel China

Assuming the 90 days trading horizon TAT Technologies is expected to generate 0.83 times more return on investment than Israel China. However, TAT Technologies is 1.2 times less risky than Israel China. It trades about 0.24 of its potential returns per unit of risk. Israel China Biotechnology is currently generating about -0.04 per unit of risk. If you would invest  646,100  in TAT Technologies on September 12, 2024 and sell it today you would earn a total of  238,900  from holding TAT Technologies or generate 36.98% return on investment over 90 days.

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

TAT Technologies  vs.  Israel China Biotechnology

TAT Technologies

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TAT Technologies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TAT Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Israel China Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Israel China Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with TAT Technologies and Israel China

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

The idea behind TAT Technologies and Israel China Biotechnology 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.