Correlation Between Clal Industries and Lesico
Can any of the company-specific risk be diversified away by investing in both Clal Industries and Lesico 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 Clal Industries and Lesico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clal Industries and and Lesico, you can compare the effects of market volatilities on Clal Industries and Lesico 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 Clal Industries with a short position of Lesico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Industries and Lesico.
Diversification Opportunities for Clal Industries and Lesico
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clal and Lesico is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Clal Industries and and Lesico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lesico and Clal Industries 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 Clal Industries and are associated (or correlated) with Lesico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lesico has no effect on the direction of Clal Industries i.e., Clal Industries and Lesico go up and down completely randomly.
Pair Corralation between Clal Industries and Lesico
Assuming the 90 days trading horizon Clal Industries is expected to generate 1.64 times less return on investment than Lesico. But when comparing it to its historical volatility, Clal Industries and is 1.07 times less risky than Lesico. It trades about 0.02 of its potential returns per unit of risk. Lesico is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 34,204 in Lesico on September 3, 2024 and sell it today you would earn a total of 6,386 from holding Lesico or generate 18.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clal Industries and vs. Lesico
Performance |
| Timeline |
| Clal Industries |
| Lesico |
Clal Industries and Lesico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Industries and Lesico
The main advantage of trading using opposite Clal Industries and Lesico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Industries position performs unexpectedly, Lesico 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 Lesico will offset losses from the drop in Lesico's long position.| Clal Industries vs. Itay Financial AA | Clal Industries vs. Bank Leumi Le Israel | Clal Industries vs. Altshuler Shaham Financial | Clal Industries vs. Millennium Food Tech LP |
| Lesico vs. EN Shoham Business | Lesico vs. Accel Solutions Group | Lesico vs. Mivtach Shamir | Lesico vs. Rani Zim Shopping |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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