Correlation Between Neto Malinda and Azrieli
Can any of the company-specific risk be diversified away by investing in both Neto Malinda and Azrieli 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 Neto Malinda and Azrieli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neto Malinda and Azrieli Group, you can compare the effects of market volatilities on Neto Malinda and Azrieli 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 Neto Malinda with a short position of Azrieli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neto Malinda and Azrieli.
Diversification Opportunities for Neto Malinda and Azrieli
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Neto and Azrieli is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Neto Malinda and Azrieli Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azrieli Group and Neto Malinda 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 Neto Malinda are associated (or correlated) with Azrieli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azrieli Group has no effect on the direction of Neto Malinda i.e., Neto Malinda and Azrieli go up and down completely randomly.
Pair Corralation between Neto Malinda and Azrieli
Assuming the 90 days trading horizon Neto Malinda is expected to generate 0.96 times more return on investment than Azrieli. However, Neto Malinda is 1.04 times less risky than Azrieli. It trades about 0.47 of its potential returns per unit of risk. Azrieli Group is currently generating about 0.28 per unit of risk. If you would invest 687,600 in Neto Malinda on August 28, 2024 and sell it today you would earn a total of 92,400 from holding Neto Malinda or generate 13.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neto Malinda vs. Azrieli Group
Performance |
| Timeline |
| Neto Malinda |
| Azrieli Group |
Neto Malinda and Azrieli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neto Malinda and Azrieli
The main advantage of trading using opposite Neto Malinda and Azrieli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neto Malinda position performs unexpectedly, Azrieli 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 Azrieli will offset losses from the drop in Azrieli's long position.The idea behind Neto Malinda and Azrieli Group 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.| Azrieli vs. Melisron | Azrieli vs. Bank Leumi Le Israel | Azrieli vs. Bank Hapoalim | Azrieli vs. Amot Investments |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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