Correlation Between Neto ME and Kafrit
Can any of the company-specific risk be diversified away by investing in both Neto ME and Kafrit 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 ME and Kafrit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neto ME Holdings and Kafrit, you can compare the effects of market volatilities on Neto ME and Kafrit 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 ME with a short position of Kafrit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neto ME and Kafrit.
Diversification Opportunities for Neto ME and Kafrit
Very poor diversification
The 3 months correlation between Neto and Kafrit is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Neto ME Holdings and Kafrit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kafrit and Neto ME 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 ME Holdings are associated (or correlated) with Kafrit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kafrit has no effect on the direction of Neto ME i.e., Neto ME and Kafrit go up and down completely randomly.
Pair Corralation between Neto ME and Kafrit
Assuming the 90 days trading horizon Neto ME Holdings is expected to generate 0.67 times more return on investment than Kafrit. However, Neto ME Holdings is 1.49 times less risky than Kafrit. It trades about 0.58 of its potential returns per unit of risk. Kafrit is currently generating about 0.03 per unit of risk. If you would invest 799,900 in Neto ME Holdings on September 1, 2024 and sell it today you would earn a total of 160,100 from holding Neto ME Holdings or generate 20.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neto ME Holdings vs. Kafrit
Performance |
| Timeline |
| Neto ME Holdings |
| Kafrit |
Neto ME and Kafrit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neto ME and Kafrit
The main advantage of trading using opposite Neto ME and Kafrit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neto ME position performs unexpectedly, Kafrit 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 Kafrit will offset losses from the drop in Kafrit's long position.| Neto ME vs. Delek Automotive Systems | Neto ME vs. Globrands Group | Neto ME vs. Kerur Holdings | Neto ME vs. Ram On Investments and |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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