Correlation Between Israel Land and Kafrit
Can any of the company-specific risk be diversified away by investing in both Israel Land and Kafrit 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 Land and Kafrit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Land Development and Kafrit, you can compare the effects of market volatilities on Israel Land and Kafrit 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 Land with a short position of Kafrit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Land and Kafrit.
Diversification Opportunities for Israel Land and Kafrit
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Israel and Kafrit is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Israel Land Development and Kafrit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kafrit and Israel Land 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 Land Development are associated (or correlated) with Kafrit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kafrit has no effect on the direction of Israel Land i.e., Israel Land and Kafrit go up and down completely randomly.
Pair Corralation between Israel Land and Kafrit
Assuming the 90 days trading horizon Israel Land Development is expected to under-perform the Kafrit. But the stock apears to be less risky and, when comparing its historical volatility, Israel Land Development is 2.83 times less risky than Kafrit. The stock trades about -0.3 of its potential returns per unit of risk. The Kafrit is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 323,900 in Kafrit on November 22, 2024 and sell it today you would earn a total of 12,400 from holding Kafrit or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Israel Land Development vs. Kafrit
Performance |
| Timeline |
| Israel Land Development |
| Kafrit |
Israel Land and Kafrit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Land and Kafrit
The main advantage of trading using opposite Israel Land and Kafrit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Land position performs unexpectedly, Kafrit 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 Kafrit will offset losses from the drop in Kafrit's long position.| Israel Land vs. Israel Land Development | Israel Land vs. Lapidoth | Israel Land vs. Ilex Medical | Israel Land vs. Aerodrome Group |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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