Correlation Between Melisron and Oil Refineries
Can any of the company-specific risk be diversified away by investing in both Melisron and Oil Refineries 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 Oil Refineries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melisron and Oil Refineries, you can compare the effects of market volatilities on Melisron and Oil Refineries 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 Oil Refineries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melisron and Oil Refineries.
Diversification Opportunities for Melisron and Oil Refineries
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Melisron and Oil is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Melisron and Oil Refineries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Refineries 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 Oil Refineries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Refineries has no effect on the direction of Melisron i.e., Melisron and Oil Refineries go up and down completely randomly.
Pair Corralation between Melisron and Oil Refineries
Assuming the 90 days trading horizon Melisron is expected to generate 0.74 times more return on investment than Oil Refineries. However, Melisron is 1.36 times less risky than Oil Refineries. It trades about 0.3 of its potential returns per unit of risk. Oil Refineries is currently generating about -0.08 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melisron vs. Oil Refineries
Performance |
| Timeline |
| Melisron |
| Oil Refineries |
Melisron and Oil Refineries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melisron and Oil Refineries
The main advantage of trading using opposite Melisron and Oil Refineries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melisron position performs unexpectedly, Oil Refineries 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 Oil Refineries will offset losses from the drop in Oil Refineries' long position.The idea behind Melisron and Oil Refineries 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.| Oil Refineries vs. Delek Group | Oil Refineries vs. Bank Leumi Le Israel | Oil Refineries vs. ICL Israel Chemicals | Oil Refineries vs. Bank Hapoalim |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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