Correlation Between Hod Assaf and Michman Basad
Can any of the company-specific risk be diversified away by investing in both Hod Assaf 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 Hod Assaf and Michman Basad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hod Assaf Industries and Michman Basad, you can compare the effects of market volatilities on Hod Assaf 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 Hod Assaf with a short position of Michman Basad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hod Assaf and Michman Basad.
Diversification Opportunities for Hod Assaf and Michman Basad
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hod and Michman is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hod Assaf Industries and Michman Basad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Michman Basad and Hod Assaf 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 Hod Assaf Industries 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 Hod Assaf i.e., Hod Assaf and Michman Basad go up and down completely randomly.
Pair Corralation between Hod Assaf and Michman Basad
Assuming the 90 days trading horizon Hod Assaf Industries is expected to generate 2.65 times more return on investment than Michman Basad. However, Hod Assaf is 2.65 times more volatile than Michman Basad. It trades about 0.32 of its potential returns per unit of risk. Michman Basad is currently generating about 0.46 per unit of risk. If you would invest 389,900 in Hod Assaf Industries on September 1, 2024 and sell it today you would earn a total of 90,800 from holding Hod Assaf Industries or generate 23.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hod Assaf Industries vs. Michman Basad
Performance |
| Timeline |
| Hod Assaf Industries |
| Michman Basad |
Hod Assaf and Michman Basad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hod Assaf and Michman Basad
The main advantage of trading using opposite Hod Assaf and Michman Basad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hod Assaf 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.| Hod Assaf vs. Amir Marketing and | Hod Assaf vs. Delek Automotive Systems | Hod Assaf vs. Brimag L | Hod Assaf vs. Oil Refineries |
| Michman Basad vs. Meitav Trade Inv | Michman Basad vs. Shagrir Group Vehicle | Michman Basad vs. Willy Food | Michman Basad vs. Millennium Food Tech LP |
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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