Correlation Between ICL Israel and Polyram Plastic
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Polyram Plastic 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 ICL Israel and Polyram Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICL Israel Chemicals and Polyram Plastic Industries, you can compare the effects of market volatilities on ICL Israel and Polyram Plastic 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 ICL Israel with a short position of Polyram Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Polyram Plastic.
Diversification Opportunities for ICL Israel and Polyram Plastic
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ICL and Polyram is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Polyram Plastic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polyram Plastic Indu and ICL Israel 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 ICL Israel Chemicals are associated (or correlated) with Polyram Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polyram Plastic Indu has no effect on the direction of ICL Israel i.e., ICL Israel and Polyram Plastic go up and down completely randomly.
Pair Corralation between ICL Israel and Polyram Plastic
Assuming the 90 days trading horizon ICL Israel Chemicals is expected to under-perform the Polyram Plastic. In addition to that, ICL Israel is 1.34 times more volatile than Polyram Plastic Industries. It trades about -0.01 of its total potential returns per unit of risk. Polyram Plastic Industries is currently generating about 0.1 per unit of volatility. If you would invest 99,541 in Polyram Plastic Industries on September 2, 2024 and sell it today you would earn a total of 32,859 from holding Polyram Plastic Industries or generate 33.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
ICL Israel Chemicals vs. Polyram Plastic Industries
Performance |
| Timeline |
| ICL Israel Chemicals |
| Polyram Plastic Indu |
ICL Israel and Polyram Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Polyram Plastic
The main advantage of trading using opposite ICL Israel and Polyram Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Polyram Plastic 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 Polyram Plastic will offset losses from the drop in Polyram Plastic's long position.| ICL Israel vs. Maytronics | ICL Israel vs. Shufersal | ICL Israel vs. Alony Hetz Properties | ICL Israel vs. Danel |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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