Correlation Between Kafrit and Israel Land
Can any of the company-specific risk be diversified away by investing in both Kafrit and Israel Land 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 Kafrit and Israel Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kafrit and Israel Land Development, you can compare the effects of market volatilities on Kafrit and Israel Land 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 Kafrit with a short position of Israel Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kafrit and Israel Land.
Diversification Opportunities for Kafrit and Israel Land
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kafrit and Israel is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kafrit and Israel Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Land Development and Kafrit 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 Kafrit are associated (or correlated) with Israel Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Land Development has no effect on the direction of Kafrit i.e., Kafrit and Israel Land go up and down completely randomly.
Pair Corralation between Kafrit and Israel Land
Assuming the 90 days trading horizon Kafrit is expected to generate 8.9 times less return on investment than Israel Land. In addition to that, Kafrit is 1.14 times more volatile than Israel Land Development. It trades about 0.03 of its total potential returns per unit of risk. Israel Land Development is currently generating about 0.34 per unit of volatility. If you would invest 74,000 in Israel Land Development on September 1, 2024 and sell it today you would earn a total of 10,990 from holding Israel Land Development or generate 14.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kafrit vs. Israel Land Development
Performance |
| Timeline |
| Kafrit |
| Israel Land Development |
Kafrit and Israel Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kafrit and Israel Land
The main advantage of trading using opposite Kafrit and Israel Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kafrit position performs unexpectedly, Israel Land 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 Israel Land will offset losses from the drop in Israel Land's long position.The idea behind Kafrit and Israel Land Development pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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