Correlation Between IDI Insurance and Golan Plastic
Can any of the company-specific risk be diversified away by investing in both IDI Insurance and Golan 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 IDI Insurance and Golan Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDI Insurance and Golan Plastic, you can compare the effects of market volatilities on IDI Insurance and Golan 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 IDI Insurance with a short position of Golan Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDI Insurance and Golan Plastic.
Diversification Opportunities for IDI Insurance and Golan Plastic
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IDI and Golan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding IDI Insurance and Golan Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golan Plastic and IDI Insurance 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 IDI Insurance are associated (or correlated) with Golan Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golan Plastic has no effect on the direction of IDI Insurance i.e., IDI Insurance and Golan Plastic go up and down completely randomly.
Pair Corralation between IDI Insurance and Golan Plastic
Assuming the 90 days trading horizon IDI Insurance is expected to generate 6.4 times less return on investment than Golan Plastic. But when comparing it to its historical volatility, IDI Insurance is 1.54 times less risky than Golan Plastic. It trades about 0.11 of its potential returns per unit of risk. Golan Plastic is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 100,000 in Golan Plastic on September 4, 2024 and sell it today you would earn a total of 23,800 from holding Golan Plastic or generate 23.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDI Insurance vs. Golan Plastic
Performance |
| Timeline |
| IDI Insurance |
| Golan Plastic |
IDI Insurance and Golan Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDI Insurance and Golan Plastic
The main advantage of trading using opposite IDI Insurance and Golan Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDI Insurance position performs unexpectedly, Golan 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 Golan Plastic will offset losses from the drop in Golan Plastic's long position.| IDI Insurance vs. Bank Hapoalim | IDI Insurance vs. Israel Discount Bank | IDI Insurance vs. First International Bank | IDI Insurance vs. Elbit Systems |
| Golan Plastic vs. EN Shoham Business | Golan Plastic vs. Accel Solutions Group | Golan Plastic vs. Mivtach Shamir | Golan Plastic vs. Rani Zim Shopping |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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