Correlation Between Kafrit and Mendelson Infrastructures
Can any of the company-specific risk be diversified away by investing in both Kafrit and Mendelson Infrastructures 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 Mendelson Infrastructures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kafrit and Mendelson Infrastructures and, you can compare the effects of market volatilities on Kafrit and Mendelson Infrastructures 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 Mendelson Infrastructures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kafrit and Mendelson Infrastructures.
Diversification Opportunities for Kafrit and Mendelson Infrastructures
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kafrit and Mendelson is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kafrit and Mendelson Infrastructures and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mendelson Infrastructures 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 Mendelson Infrastructures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mendelson Infrastructures has no effect on the direction of Kafrit i.e., Kafrit and Mendelson Infrastructures go up and down completely randomly.
Pair Corralation between Kafrit and Mendelson Infrastructures
Assuming the 90 days trading horizon Kafrit is expected to generate 1.55 times more return on investment than Mendelson Infrastructures. However, Kafrit is 1.55 times more volatile than Mendelson Infrastructures and. It trades about 0.34 of its potential returns per unit of risk. Mendelson Infrastructures and is currently generating about 0.43 per unit of risk. If you would invest 295,100 in Kafrit on December 4, 2024 and sell it today you would earn a total of 50,900 from holding Kafrit or generate 17.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kafrit vs. Mendelson Infrastructures and
Performance |
| Timeline |
| Kafrit |
| Mendelson Infrastructures |
Kafrit and Mendelson Infrastructures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kafrit and Mendelson Infrastructures
The main advantage of trading using opposite Kafrit and Mendelson Infrastructures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kafrit position performs unexpectedly, Mendelson Infrastructures 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 Mendelson Infrastructures will offset losses from the drop in Mendelson Infrastructures' long position.The idea behind Kafrit and Mendelson Infrastructures and 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.| Mendelson Infrastructures vs. Klil Industries | Mendelson Infrastructures vs. Scope Metals Group | Mendelson Infrastructures vs. Kafrit | Mendelson Infrastructures vs. Ralco Agencies |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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