Correlation Between Teva Pharmaceutical and Intercure

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

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

Diversification Opportunities for Teva Pharmaceutical and Intercure

0.42

Correlation Coefficient

Teva Pharmaceutical  Intercure

Very weak diversification

The 3 months correlation between Teva and Intercure is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharmaceutical Industries and Intercure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercure and Teva Pharmaceutical 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 Teva Pharmaceutical Industries are associated (or correlated) with Intercure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercure has no effect on the direction of Teva Pharmaceutical i.e., Teva Pharmaceutical and Intercure go up and down completely randomly.

Pair Corralation between Teva Pharmaceutical and Intercure

Assuming the 90 days trading horizon Teva Pharmaceutical Industries is expected to generate 0.75 times more return on investment than Intercure. However, Teva Pharmaceutical Industries is 1.33 times less risky than Intercure. It trades about 0.14 of its potential returns per unit of risk. Intercure is currently generating about -0.04 per unit of risk. If you would invest  663,500  in Teva Pharmaceutical Industries on September 26, 2024 and sell it today you would earn a total of  147,900  from holding Teva Pharmaceutical Industries or generate 22.29% return on investment over 90 days.

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

Teva Pharmaceutical Industries  vs.  Intercure

Teva Pharmaceutical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teva Pharmaceutical Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Teva Pharmaceutical sustained solid returns over the last few months and may actually be approaching a breakup point.

Intercure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intercure 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 Teva Pharmaceutical and Intercure

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

The idea behind Teva Pharmaceutical Industries and Intercure 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.