Correlation Between Lesico and Elron Electronic
Can any of the company-specific risk be diversified away by investing in both Lesico and Elron Electronic 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 Lesico and Elron Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lesico and Elron Electronic Industries, you can compare the effects of market volatilities on Lesico and Elron Electronic 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 Lesico with a short position of Elron Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lesico and Elron Electronic.
Diversification Opportunities for Lesico and Elron Electronic
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lesico and Elron is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lesico and Elron Electronic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elron Electronic Ind and Lesico 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 Lesico are associated (or correlated) with Elron Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elron Electronic Ind has no effect on the direction of Lesico i.e., Lesico and Elron Electronic go up and down completely randomly.
Pair Corralation between Lesico and Elron Electronic
Assuming the 90 days trading horizon Lesico is expected to generate 1.65 times less return on investment than Elron Electronic. But when comparing it to its historical volatility, Lesico is 3.19 times less risky than Elron Electronic. It trades about 0.1 of its potential returns per unit of risk. Elron Electronic Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 42,193 in Elron Electronic Industries on August 28, 2024 and sell it today you would earn a total of 2,707 from holding Elron Electronic Industries or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lesico vs. Elron Electronic Industries
Performance |
| Timeline |
| Lesico |
| Elron Electronic Ind |
Lesico and Elron Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lesico and Elron Electronic
The main advantage of trading using opposite Lesico and Elron Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lesico position performs unexpectedly, Elron Electronic 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 Elron Electronic will offset losses from the drop in Elron Electronic's long position.The idea behind Lesico and Elron Electronic Industries 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.| Elron Electronic vs. Bank Hapoalim | Elron Electronic vs. Israel Discount Bank | Elron Electronic vs. Bezeq Israeli Telecommunication | Elron Electronic vs. Elbit Systems |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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