Correlation Between Inrom Construction and Netz Hotels
Can any of the company-specific risk be diversified away by investing in both Inrom Construction and Netz Hotels 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 Inrom Construction and Netz Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inrom Construction Industries and Netz Hotels, you can compare the effects of market volatilities on Inrom Construction and Netz Hotels 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 Inrom Construction with a short position of Netz Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inrom Construction and Netz Hotels.
Diversification Opportunities for Inrom Construction and Netz Hotels
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Inrom and Netz is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Inrom Construction Industries and Netz Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netz Hotels and Inrom Construction 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 Inrom Construction Industries are associated (or correlated) with Netz Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netz Hotels has no effect on the direction of Inrom Construction i.e., Inrom Construction and Netz Hotels go up and down completely randomly.
Pair Corralation between Inrom Construction and Netz Hotels
Assuming the 90 days trading horizon Inrom Construction Industries is expected to generate 0.76 times more return on investment than Netz Hotels. However, Inrom Construction Industries is 1.32 times less risky than Netz Hotels. It trades about 0.4 of its potential returns per unit of risk. Netz Hotels is currently generating about 0.26 per unit of risk. If you would invest 132,847 in Inrom Construction Industries on September 1, 2024 and sell it today you would earn a total of 23,953 from holding Inrom Construction Industries or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inrom Construction Industries vs. Netz Hotels
Performance |
| Timeline |
| Inrom Construction |
| Netz Hotels |
Inrom Construction and Netz Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inrom Construction and Netz Hotels
The main advantage of trading using opposite Inrom Construction and Netz Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inrom Construction position performs unexpectedly, Netz Hotels 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 Netz Hotels will offset losses from the drop in Netz Hotels' long position.| Inrom Construction vs. Arad | Inrom Construction vs. Alony Hetz Properties | Inrom Construction vs. Airport City | Inrom Construction vs. Harel Insurance Investments |
| Netz Hotels vs. Direct Capital Investments | Netz Hotels vs. Brainsway | Netz Hotels vs. Mivne Real Estate | Netz Hotels vs. Photomyne |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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