Correlation Between Arad and Oron Group
Can any of the company-specific risk be diversified away by investing in both Arad and Oron Group 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 Oron Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arad and Oron Group Investments, you can compare the effects of market volatilities on Arad and Oron Group 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 Oron Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arad and Oron Group.
Diversification Opportunities for Arad and Oron Group
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Arad and Oron is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Arad and Oron Group Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oron Group Investments 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 Oron Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oron Group Investments has no effect on the direction of Arad i.e., Arad and Oron Group go up and down completely randomly.
Pair Corralation between Arad and Oron Group
Assuming the 90 days trading horizon Arad is expected to under-perform the Oron Group. But the stock apears to be less risky and, when comparing its historical volatility, Arad is 1.25 times less risky than Oron Group. The stock trades about -0.04 of its potential returns per unit of risk. The Oron Group Investments is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 56,999 in Oron Group Investments on August 29, 2024 and sell it today you would earn a total of 36,501 from holding Oron Group Investments or generate 64.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arad vs. Oron Group Investments
Performance |
| Timeline |
| Arad |
| Oron Group Investments |
Arad and Oron Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arad and Oron Group
The main advantage of trading using opposite Arad and Oron Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arad position performs unexpectedly, Oron Group 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 Oron Group will offset losses from the drop in Oron Group's long position.| Arad vs. Alrov Properties Lodgings | Arad vs. Iargento Hi Tech | Arad vs. ICL Israel Chemicals | Arad vs. Computer Direct |
| Oron Group vs. Ormat Technologies | Oron Group vs. Multi Retail Group | Oron Group vs. Nova | Oron Group vs. B Communications |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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