Correlation Between Nova and Klil Industries
Can any of the company-specific risk be diversified away by investing in both Nova and Klil Industries 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 Nova and Klil Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova and Klil Industries, you can compare the effects of market volatilities on Nova and Klil Industries 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 Nova with a short position of Klil Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova and Klil Industries.
Diversification Opportunities for Nova and Klil Industries
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nova and Klil is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nova and Klil Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klil Industries and Nova 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 Nova are associated (or correlated) with Klil Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klil Industries has no effect on the direction of Nova i.e., Nova and Klil Industries go up and down completely randomly.
Pair Corralation between Nova and Klil Industries
Assuming the 90 days trading horizon Nova is expected to under-perform the Klil Industries. In addition to that, Nova is 1.52 times more volatile than Klil Industries. It trades about -0.02 of its total potential returns per unit of risk. Klil Industries is currently generating about 0.11 per unit of volatility. If you would invest 1,983,000 in Klil Industries on August 30, 2024 and sell it today you would earn a total of 529,000 from holding Klil Industries or generate 26.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova vs. Klil Industries
Performance |
| Timeline |
| Nova |
| Klil Industries |
Nova and Klil Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova and Klil Industries
The main advantage of trading using opposite Nova and Klil Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova position performs unexpectedly, Klil Industries 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 Klil Industries will offset losses from the drop in Klil Industries' long position.The idea behind Nova and Klil 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.| Klil Industries vs. Ormat Technologies | Klil Industries vs. Multi Retail Group | Klil Industries vs. Nova | Klil Industries vs. B Communications |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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