Correlation Between Dan Hotels and Michman Basad
Can any of the company-specific risk be diversified away by investing in both Dan Hotels and Michman Basad 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 Dan Hotels and Michman Basad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dan Hotels and Michman Basad, you can compare the effects of market volatilities on Dan Hotels and Michman Basad 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 Dan Hotels with a short position of Michman Basad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dan Hotels and Michman Basad.
Diversification Opportunities for Dan Hotels and Michman Basad
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dan and Michman is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dan Hotels and Michman Basad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Michman Basad and Dan Hotels 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 Dan Hotels are associated (or correlated) with Michman Basad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Michman Basad has no effect on the direction of Dan Hotels i.e., Dan Hotels and Michman Basad go up and down completely randomly.
Pair Corralation between Dan Hotels and Michman Basad
Assuming the 90 days trading horizon Dan Hotels is expected to under-perform the Michman Basad. In addition to that, Dan Hotels is 1.03 times more volatile than Michman Basad. It trades about -0.08 of its total potential returns per unit of risk. Michman Basad is currently generating about 0.42 per unit of volatility. If you would invest 1,883,000 in Michman Basad on August 29, 2024 and sell it today you would earn a total of 217,000 from holding Michman Basad or generate 11.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dan Hotels vs. Michman Basad
Performance |
| Timeline |
| Dan Hotels |
| Michman Basad |
Dan Hotels and Michman Basad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dan Hotels and Michman Basad
The main advantage of trading using opposite Dan Hotels and Michman Basad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dan Hotels position performs unexpectedly, Michman Basad 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 Michman Basad will offset losses from the drop in Michman Basad's long position.| Dan Hotels vs. Direct Capital Investments | Dan Hotels vs. Safe T Group | Dan Hotels vs. Israel China Biotechnology | Dan Hotels vs. Biomedix Incubator |
| Michman Basad vs. Magic Software Enterprises | Michman Basad vs. Suny Cellular Communication | Michman Basad vs. RSL Electronics | Michman Basad vs. Inrom Construction Industries |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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