Correlation Between Arad and Bet Shemesh
Can any of the company-specific risk be diversified away by investing in both Arad and Bet Shemesh 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 and Bet Shemesh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arad and Bet Shemesh Engines, you can compare the effects of market volatilities on Arad and Bet Shemesh 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 with a short position of Bet Shemesh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arad and Bet Shemesh.
Diversification Opportunities for Arad and Bet Shemesh
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Arad and Bet is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Arad and Bet Shemesh Engines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bet Shemesh Engines and Arad 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 are associated (or correlated) with Bet Shemesh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bet Shemesh Engines has no effect on the direction of Arad i.e., Arad and Bet Shemesh go up and down completely randomly.
Pair Corralation between Arad and Bet Shemesh
Assuming the 90 days trading horizon Arad is expected to generate 5.91 times less return on investment than Bet Shemesh. But when comparing it to its historical volatility, Arad is 1.83 times less risky than Bet Shemesh. It trades about 0.17 of its potential returns per unit of risk. Bet Shemesh Engines is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 2,360,000 in Bet Shemesh Engines on August 27, 2024 and sell it today you would earn a total of 1,141,000 from holding Bet Shemesh Engines or generate 48.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arad vs. Bet Shemesh Engines
Performance |
| Timeline |
| Arad |
| Bet Shemesh Engines |
Arad and Bet Shemesh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arad and Bet Shemesh
The main advantage of trading using opposite Arad and Bet Shemesh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arad position performs unexpectedly, Bet Shemesh 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 Bet Shemesh will offset losses from the drop in Bet Shemesh's long position.| Arad vs. Automatic Bank Services | Arad vs. EN Shoham Business | Arad vs. Rapac Communication Infrastructure | Arad vs. Tadiran Hldg |
| Bet Shemesh vs. Arad | Bet Shemesh vs. Alony Hetz Properties | Bet Shemesh vs. Danel | Bet Shemesh 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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