Correlation Between Melisron and Knafaim
Can any of the company-specific risk be diversified away by investing in both Melisron and Knafaim 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 Melisron and Knafaim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melisron and Knafaim, you can compare the effects of market volatilities on Melisron and Knafaim 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 Melisron with a short position of Knafaim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melisron and Knafaim.
Diversification Opportunities for Melisron and Knafaim
Very poor diversification
The 3 months correlation between Melisron and Knafaim is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Melisron and Knafaim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knafaim and Melisron 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 Melisron are associated (or correlated) with Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knafaim has no effect on the direction of Melisron i.e., Melisron and Knafaim go up and down completely randomly.
Pair Corralation between Melisron and Knafaim
Assuming the 90 days trading horizon Melisron is expected to generate 1.07 times more return on investment than Knafaim. However, Melisron is 1.07 times more volatile than Knafaim. It trades about 0.3 of its potential returns per unit of risk. Knafaim is currently generating about 0.13 per unit of risk. If you would invest 2,975,000 in Melisron on September 1, 2024 and sell it today you would earn a total of 245,000 from holding Melisron or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melisron vs. Knafaim
Performance |
| Timeline |
| Melisron |
| Knafaim |
Melisron and Knafaim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melisron and Knafaim
The main advantage of trading using opposite Melisron and Knafaim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melisron position performs unexpectedly, Knafaim 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 Knafaim will offset losses from the drop in Knafaim's long position.The idea behind Melisron and Knafaim 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.| Knafaim vs. El Al Israel | Knafaim vs. Melisron | Knafaim vs. Global Knafaim Leasing | Knafaim vs. Bezeq Israeli Telecommunication |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |