Correlation Between Airport City and Shapir Engineering
Can any of the company-specific risk be diversified away by investing in both Airport City and Shapir Engineering 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 Airport City and Shapir Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airport City and Shapir Engineering Industry, you can compare the effects of market volatilities on Airport City and Shapir Engineering 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 Airport City with a short position of Shapir Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airport City and Shapir Engineering.
Diversification Opportunities for Airport City and Shapir Engineering
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Airport and Shapir is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Airport City and Shapir Engineering Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shapir Engineering and Airport City 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 Airport City are associated (or correlated) with Shapir Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shapir Engineering has no effect on the direction of Airport City i.e., Airport City and Shapir Engineering go up and down completely randomly.
Pair Corralation between Airport City and Shapir Engineering
Assuming the 90 days trading horizon Airport City is expected to generate 1.88 times less return on investment than Shapir Engineering. But when comparing it to its historical volatility, Airport City is 1.55 times less risky than Shapir Engineering. It trades about 0.35 of its potential returns per unit of risk. Shapir Engineering Industry is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 233,000 in Shapir Engineering Industry on August 28, 2024 and sell it today you would earn a total of 40,000 from holding Shapir Engineering Industry or generate 17.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airport City vs. Shapir Engineering Industry
Performance |
| Timeline |
| Airport City |
| Shapir Engineering |
Airport City and Shapir Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airport City and Shapir Engineering
The main advantage of trading using opposite Airport City and Shapir Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airport City position performs unexpectedly, Shapir Engineering 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 Shapir Engineering will offset losses from the drop in Shapir Engineering's long position.| Airport City vs. Melisron | Airport City vs. Alony Hetz Properties | Airport City vs. Amot Investments | Airport City vs. Azrieli Group |
| Shapir Engineering vs. Arad | Shapir Engineering vs. Alony Hetz Properties | Shapir Engineering vs. Danel | Shapir Engineering 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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