Correlation Between YH Dimri and Petrochemical
Can any of the company-specific risk be diversified away by investing in both YH Dimri and Petrochemical 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 YH Dimri and Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YH Dimri Construction and Petrochemical, you can compare the effects of market volatilities on YH Dimri and Petrochemical 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 YH Dimri with a short position of Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of YH Dimri and Petrochemical.
Diversification Opportunities for YH Dimri and Petrochemical
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DIMRI and Petrochemical is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding YH Dimri Construction and Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrochemical and YH Dimri 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 YH Dimri Construction are associated (or correlated) with Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrochemical has no effect on the direction of YH Dimri i.e., YH Dimri and Petrochemical go up and down completely randomly.
Pair Corralation between YH Dimri and Petrochemical
Assuming the 90 days trading horizon YH Dimri Construction is expected to generate 0.95 times more return on investment than Petrochemical. However, YH Dimri Construction is 1.05 times less risky than Petrochemical. It trades about 0.25 of its potential returns per unit of risk. Petrochemical is currently generating about 0.02 per unit of risk. If you would invest 3,163,000 in YH Dimri Construction on August 29, 2024 and sell it today you would earn a total of 284,000 from holding YH Dimri Construction or generate 8.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
YH Dimri Construction vs. Petrochemical
Performance |
| Timeline |
| YH Dimri Construction |
| Petrochemical |
YH Dimri and Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YH Dimri and Petrochemical
The main advantage of trading using opposite YH Dimri and Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YH Dimri position performs unexpectedly, Petrochemical 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 Petrochemical will offset losses from the drop in Petrochemical's long position.| YH Dimri vs. Israel Canada | YH Dimri vs. Azrieli Group | YH Dimri vs. Delek Group | YH Dimri vs. Israel Discount Bank |
| Petrochemical vs. Opal Balance | Petrochemical vs. B Communications | Petrochemical vs. Holmes Place International | Petrochemical vs. Nova |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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