Correlation Between Arad Investment and Global Knafaim
Can any of the company-specific risk be diversified away by investing in both Arad Investment and Global Knafaim 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 Arad Investment and Global Knafaim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arad Investment Industrial and Global Knafaim Leasing, you can compare the effects of market volatilities on Arad Investment and Global Knafaim 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 Arad Investment with a short position of Global Knafaim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arad Investment and Global Knafaim.
Diversification Opportunities for Arad Investment and Global Knafaim
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arad and Global is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Arad Investment Industrial and Global Knafaim Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Knafaim Leasing and Arad Investment 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 Arad Investment Industrial are associated (or correlated) with Global Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Knafaim Leasing has no effect on the direction of Arad Investment i.e., Arad Investment and Global Knafaim go up and down completely randomly.
Pair Corralation between Arad Investment and Global Knafaim
Assuming the 90 days trading horizon Arad Investment Industrial is expected to generate 1.94 times more return on investment than Global Knafaim. However, Arad Investment is 1.94 times more volatile than Global Knafaim Leasing. It trades about 0.58 of its potential returns per unit of risk. Global Knafaim Leasing is currently generating about -0.09 per unit of risk. If you would invest 946,000 in Arad Investment Industrial on August 25, 2024 and sell it today you would earn a total of 385,000 from holding Arad Investment Industrial or generate 40.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arad Investment Industrial vs. Global Knafaim Leasing
Performance |
| Timeline |
| Arad Investment Indu |
| Global Knafaim Leasing |
Arad Investment and Global Knafaim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arad Investment and Global Knafaim
The main advantage of trading using opposite Arad Investment and Global Knafaim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arad Investment position performs unexpectedly, Global Knafaim 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 Global Knafaim will offset losses from the drop in Global Knafaim's long position.| Arad Investment vs. Arad | Arad Investment vs. Alony Hetz Properties | Arad Investment vs. Danel | Arad Investment vs. Airport City |
| Global Knafaim vs. Arad | Global Knafaim vs. Alony Hetz Properties | Global Knafaim vs. Danel | Global Knafaim vs. Airport City |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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