Correlation Between PCB Tec and Ashot Ashkelon
Can any of the company-specific risk be diversified away by investing in both PCB Tec and Ashot Ashkelon 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 PCB Tec and Ashot Ashkelon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PCB Tec and Ashot Ashkelon Industries, you can compare the effects of market volatilities on PCB Tec and Ashot Ashkelon 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 PCB Tec with a short position of Ashot Ashkelon. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCB Tec and Ashot Ashkelon.
Diversification Opportunities for PCB Tec and Ashot Ashkelon
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PCB and Ashot is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding PCB Tec and Ashot Ashkelon Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashot Ashkelon Industries and PCB Tec 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 PCB Tec are associated (or correlated) with Ashot Ashkelon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashot Ashkelon Industries has no effect on the direction of PCB Tec i.e., PCB Tec and Ashot Ashkelon go up and down completely randomly.
Pair Corralation between PCB Tec and Ashot Ashkelon
Assuming the 90 days trading horizon PCB Tec is expected to generate 1.3 times more return on investment than Ashot Ashkelon. However, PCB Tec is 1.3 times more volatile than Ashot Ashkelon Industries. It trades about -0.08 of its potential returns per unit of risk. Ashot Ashkelon Industries is currently generating about -0.14 per unit of risk. If you would invest 71,290 in PCB Tec on September 1, 2024 and sell it today you would lose (6,090) from holding PCB Tec or give up 8.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PCB Tec vs. Ashot Ashkelon Industries
Performance |
| Timeline |
| PCB Tec |
| Ashot Ashkelon Industries |
PCB Tec and Ashot Ashkelon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PCB Tec and Ashot Ashkelon
The main advantage of trading using opposite PCB Tec and Ashot Ashkelon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCB Tec position performs unexpectedly, Ashot Ashkelon 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 Ashot Ashkelon will offset losses from the drop in Ashot Ashkelon's long position.The idea behind PCB Tec and Ashot Ashkelon 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.| Ashot Ashkelon vs. Bet Shemesh Engines | Ashot Ashkelon vs. Elbit Systems | Ashot Ashkelon vs. Bezeq Israeli Telecommunication | Ashot Ashkelon vs. Rekah Pharmaceutical Industry |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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