Correlation Between Hilan and Discount Investment
Can any of the company-specific risk be diversified away by investing in both Hilan and Discount 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 Hilan and Discount Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilan and Discount Investment Corp, you can compare the effects of market volatilities on Hilan and Discount 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 Hilan with a short position of Discount Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilan and Discount Investment.
Diversification Opportunities for Hilan and Discount Investment
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hilan and Discount is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hilan and Discount Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discount Investment Corp and Hilan 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 Hilan are associated (or correlated) with Discount Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discount Investment Corp has no effect on the direction of Hilan i.e., Hilan and Discount Investment go up and down completely randomly.
Pair Corralation between Hilan and Discount Investment
Assuming the 90 days trading horizon Hilan is expected to generate 0.59 times more return on investment than Discount Investment. However, Hilan is 1.7 times less risky than Discount Investment. It trades about 0.03 of its potential returns per unit of risk. Discount Investment Corp is currently generating about -0.11 per unit of risk. If you would invest 2,225,000 in Hilan on October 26, 2024 and sell it today you would earn a total of 12,000 from holding Hilan or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilan vs. Discount Investment Corp
Performance |
| Timeline |
| Hilan |
| Discount Investment Corp |
Hilan and Discount Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilan and Discount Investment
The main advantage of trading using opposite Hilan and Discount Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilan position performs unexpectedly, Discount 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 Discount Investment will offset losses from the drop in Discount Investment's long position.The idea behind Hilan and Discount Investment Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Discount Investment vs. Israel Discount Bank | Discount Investment vs. Shufersal | Discount Investment vs. Sella Real Estate | Discount Investment vs. Hilan |
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.
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