Correlation Between Arad Investment and Victory Supermarket
Can any of the company-specific risk be diversified away by investing in both Arad Investment and Victory Supermarket 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 Victory Supermarket 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 Victory Supermarket Chain, you can compare the effects of market volatilities on Arad Investment and Victory Supermarket 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 Victory Supermarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arad Investment and Victory Supermarket.
Diversification Opportunities for Arad Investment and Victory Supermarket
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arad and Victory is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Arad Investment Industrial and Victory Supermarket Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Supermarket Chain 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 Victory Supermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Supermarket Chain has no effect on the direction of Arad Investment i.e., Arad Investment and Victory Supermarket go up and down completely randomly.
Pair Corralation between Arad Investment and Victory Supermarket
Assuming the 90 days trading horizon Arad Investment Industrial is expected to generate 1.94 times more return on investment than Victory Supermarket. However, Arad Investment is 1.94 times more volatile than Victory Supermarket Chain. It trades about 0.56 of its potential returns per unit of risk. Victory Supermarket Chain is currently generating about 0.19 per unit of risk. If you would invest 950,000 in Arad Investment Industrial on August 30, 2024 and sell it today you would earn a total of 421,000 from holding Arad Investment Industrial or generate 44.32% 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. Victory Supermarket Chain
Performance |
| Timeline |
| Arad Investment Indu |
| Victory Supermarket Chain |
Arad Investment and Victory Supermarket Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arad Investment and Victory Supermarket
The main advantage of trading using opposite Arad Investment and Victory Supermarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arad Investment position performs unexpectedly, Victory Supermarket 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 Victory Supermarket will offset losses from the drop in Victory Supermarket's long position.| Arad Investment vs. Ormat Technologies | Arad Investment vs. Multi Retail Group | Arad Investment vs. Nova | Arad Investment vs. B Communications |
| Victory Supermarket vs. B Communications | Victory Supermarket vs. Holmes Place International | Victory Supermarket vs. Nova | Victory Supermarket vs. Petrochemical |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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