Correlation Between Arad Investment and Value Capital
Can any of the company-specific risk be diversified away by investing in both Arad Investment and Value Capital 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 Value Capital 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 Value Capital One, you can compare the effects of market volatilities on Arad Investment and Value Capital 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 Value Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arad Investment and Value Capital.
Diversification Opportunities for Arad Investment and Value Capital
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arad and Value is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Arad Investment Industrial and Value Capital One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Capital One 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 Value Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Capital One has no effect on the direction of Arad Investment i.e., Arad Investment and Value Capital go up and down completely randomly.
Pair Corralation between Arad Investment and Value Capital
Assuming the 90 days trading horizon Arad Investment Industrial is expected to generate 0.75 times more return on investment than Value Capital. However, Arad Investment Industrial is 1.34 times less risky than Value Capital. It trades about 0.17 of its potential returns per unit of risk. Value Capital One is currently generating about -0.08 per unit of risk. If you would invest 898,600 in Arad Investment Industrial on September 3, 2024 and sell it today you would earn a total of 472,400 from holding Arad Investment Industrial or generate 52.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arad Investment Industrial vs. Value Capital One
Performance |
| Timeline |
| Arad Investment Indu |
| Value Capital One |
Arad Investment and Value Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arad Investment and Value Capital
The main advantage of trading using opposite Arad Investment and Value Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arad Investment position performs unexpectedly, Value Capital 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 Value Capital will offset losses from the drop in Value Capital's long position.| Arad Investment vs. EN Shoham Business | Arad Investment vs. Accel Solutions Group | Arad Investment vs. Mivtach Shamir | Arad Investment vs. Rani Zim Shopping |
| Value Capital vs. Bezeq Israeli Telecommunication | Value Capital vs. Batm Advanced Communications | Value Capital vs. Arad Investment Industrial | Value Capital vs. Oron Group Investments |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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