Correlation Between Israel China and Harel Insurance
Can any of the company-specific risk be diversified away by investing in both Israel China and Harel Insurance 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 Israel China and Harel Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel China Biotechnology and Harel Insurance Investments, you can compare the effects of market volatilities on Israel China and Harel Insurance 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 Israel China with a short position of Harel Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel China and Harel Insurance.
Diversification Opportunities for Israel China and Harel Insurance
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Israel and Harel is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Israel China Biotechnology and Harel Insurance Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harel Insurance Inve and Israel China 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 Israel China Biotechnology are associated (or correlated) with Harel Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harel Insurance Inve has no effect on the direction of Israel China i.e., Israel China and Harel Insurance go up and down completely randomly.
Pair Corralation between Israel China and Harel Insurance
Assuming the 90 days trading horizon Israel China Biotechnology is expected to generate 5.06 times more return on investment than Harel Insurance. However, Israel China is 5.06 times more volatile than Harel Insurance Investments. It trades about 0.04 of its potential returns per unit of risk. Harel Insurance Investments is currently generating about 0.13 per unit of risk. If you would invest 66,700 in Israel China Biotechnology on September 4, 2024 and sell it today you would lose (7,300) from holding Israel China Biotechnology or give up 10.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel China Biotechnology vs. Harel Insurance Investments
Performance |
| Timeline |
| Israel China Biotech |
| Harel Insurance Inve |
Israel China and Harel Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel China and Harel Insurance
The main advantage of trading using opposite Israel China and Harel Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel China position performs unexpectedly, Harel Insurance 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 Harel Insurance will offset losses from the drop in Harel Insurance's long position.| Israel China vs. MEITAV INVESTMENTS HOUSE | Israel China vs. El Al Israel | Israel China vs. Gan Shmuel | Israel China vs. Polyram Plastic Industries |
| Harel Insurance vs. Bank Hapoalim | Harel Insurance vs. Israel Discount Bank | Harel Insurance vs. First International Bank | Harel Insurance vs. Elbit Systems |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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