Correlation Between Global Knafaim and Arad Investment
Can any of the company-specific risk be diversified away by investing in both Global Knafaim and Arad Investment 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 Global Knafaim and Arad Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Knafaim Leasing and Arad Investment Industrial, you can compare the effects of market volatilities on Global Knafaim and Arad Investment 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 Global Knafaim with a short position of Arad Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Knafaim and Arad Investment.
Diversification Opportunities for Global Knafaim and Arad Investment
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Arad is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Global Knafaim Leasing and Arad Investment Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arad Investment Indu and Global Knafaim 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 Global Knafaim Leasing are associated (or correlated) with Arad Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arad Investment Indu has no effect on the direction of Global Knafaim i.e., Global Knafaim and Arad Investment go up and down completely randomly.
Pair Corralation between Global Knafaim and Arad Investment
Assuming the 90 days trading horizon Global Knafaim Leasing is expected to under-perform the Arad Investment. But the stock apears to be less risky and, when comparing its historical volatility, Global Knafaim Leasing is 1.93 times less risky than Arad Investment. The stock trades about -0.17 of its potential returns per unit of risk. The Arad Investment Industrial is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 946,000 in Arad Investment Industrial on August 28, 2024 and sell it today you would earn a total of 397,000 from holding Arad Investment Industrial or generate 41.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Knafaim Leasing vs. Arad Investment Industrial
Performance |
| Timeline |
| Global Knafaim Leasing |
| Arad Investment Indu |
Global Knafaim and Arad Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Knafaim and Arad Investment
The main advantage of trading using opposite Global Knafaim and Arad Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Knafaim position performs unexpectedly, Arad Investment 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 Arad Investment will offset losses from the drop in Arad Investment's long position.| Global Knafaim vs. Arad | Global Knafaim vs. Alony Hetz Properties | Global Knafaim vs. Danel | Global Knafaim vs. Airport City |
| Arad Investment vs. Arad | Arad Investment vs. Alony Hetz Properties | Arad Investment vs. Danel | Arad Investment 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |