Correlation Between Clal Insurance and Highcon Systems
Can any of the company-specific risk be diversified away by investing in both Clal Insurance and Highcon Systems 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 Insurance and Highcon Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clal Insurance Enterprises and Highcon Systems, you can compare the effects of market volatilities on Clal Insurance and Highcon Systems 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 Insurance with a short position of Highcon Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and Highcon Systems.
Diversification Opportunities for Clal Insurance and Highcon Systems
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Clal and Highcon is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Highcon Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highcon Systems and Clal Insurance 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 Insurance Enterprises are associated (or correlated) with Highcon Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highcon Systems has no effect on the direction of Clal Insurance i.e., Clal Insurance and Highcon Systems go up and down completely randomly.
Pair Corralation between Clal Insurance and Highcon Systems
Assuming the 90 days trading horizon Clal Insurance is expected to generate 2.5 times less return on investment than Highcon Systems. But when comparing it to its historical volatility, Clal Insurance Enterprises is 2.31 times less risky than Highcon Systems. It trades about 0.28 of its potential returns per unit of risk. Highcon Systems is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 8,260 in Highcon Systems on September 4, 2024 and sell it today you would earn a total of 1,790 from holding Highcon Systems or generate 21.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clal Insurance Enterprises vs. Highcon Systems
Performance |
| Timeline |
| Clal Insurance Enter |
| Highcon Systems |
Clal Insurance and Highcon Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clal Insurance and Highcon Systems
The main advantage of trading using opposite Clal Insurance and Highcon Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clal Insurance position performs unexpectedly, Highcon Systems 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 Highcon Systems will offset losses from the drop in Highcon Systems' long position.| Clal Insurance vs. Bank Hapoalim | Clal Insurance vs. Israel Discount Bank | Clal Insurance vs. First International Bank | Clal Insurance vs. Elbit Systems |
| Highcon Systems vs. Aquarius Engines AM | Highcon Systems vs. Brainsway | Highcon Systems vs. Mivne Real Estate | Highcon Systems vs. Photomyne |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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