Correlation Between Petrochemical and Shufersal
Can any of the company-specific risk be diversified away by investing in both Petrochemical and Shufersal 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 Petrochemical and Shufersal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrochemical and Shufersal, you can compare the effects of market volatilities on Petrochemical and Shufersal 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 Petrochemical with a short position of Shufersal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrochemical and Shufersal.
Diversification Opportunities for Petrochemical and Shufersal
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petrochemical and Shufersal is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Petrochemical and Shufersal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shufersal and Petrochemical 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 Petrochemical are associated (or correlated) with Shufersal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shufersal has no effect on the direction of Petrochemical i.e., Petrochemical and Shufersal go up and down completely randomly.
Pair Corralation between Petrochemical and Shufersal
Assuming the 90 days trading horizon Petrochemical is expected to generate 1.46 times more return on investment than Shufersal. However, Petrochemical is 1.46 times more volatile than Shufersal. It trades about 0.1 of its potential returns per unit of risk. Shufersal is currently generating about 0.04 per unit of risk. If you would invest 22,000 in Petrochemical on November 28, 2024 and sell it today you would earn a total of 750.00 from holding Petrochemical or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrochemical vs. Shufersal
Performance |
| Timeline |
| Petrochemical |
| Shufersal |
Petrochemical and Shufersal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrochemical and Shufersal
The main advantage of trading using opposite Petrochemical and Shufersal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrochemical position performs unexpectedly, Shufersal 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 Shufersal will offset losses from the drop in Shufersal's long position.| Petrochemical vs. Clal Biotechnology Industries | Petrochemical vs. Multi Retail Group | Petrochemical vs. Meitav Trade Inv | Petrochemical vs. Harel Insurance Investments |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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