Correlation Between Paz Oil and Lahav LR
Can any of the company-specific risk be diversified away by investing in both Paz Oil and Lahav LR 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 Paz Oil and Lahav LR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paz Oil and Lahav LR Real, you can compare the effects of market volatilities on Paz Oil and Lahav LR 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 Paz Oil with a short position of Lahav LR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paz Oil and Lahav LR.
Diversification Opportunities for Paz Oil and Lahav LR
Almost no diversification
The 3 months correlation between Paz and Lahav is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Paz Oil and Lahav LR Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lahav LR Real and Paz Oil 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 Paz Oil are associated (or correlated) with Lahav LR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lahav LR Real has no effect on the direction of Paz Oil i.e., Paz Oil and Lahav LR go up and down completely randomly.
Pair Corralation between Paz Oil and Lahav LR
Assuming the 90 days trading horizon Paz Oil is expected to generate 0.95 times more return on investment than Lahav LR. However, Paz Oil is 1.06 times less risky than Lahav LR. It trades about 0.11 of its potential returns per unit of risk. Lahav LR Real is currently generating about 0.09 per unit of risk. If you would invest 2,489,197 in Paz Oil on November 28, 2024 and sell it today you would earn a total of 2,936,803 from holding Paz Oil or generate 117.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paz Oil vs. Lahav LR Real
Performance |
| Timeline |
| Paz Oil |
| Lahav LR Real |
Paz Oil and Lahav LR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paz Oil and Lahav LR
The main advantage of trading using opposite Paz Oil and Lahav LR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paz Oil position performs unexpectedly, Lahav LR 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 Lahav LR will offset losses from the drop in Lahav LR's long position.| Paz Oil vs. Delek Group | Paz Oil vs. Bank Hapoalim | Paz Oil vs. Oil Refineries | Paz Oil vs. Bezeq Israeli Telecommunication |
| Lahav LR vs. Israel Canada | Lahav LR vs. Alony Hetz Properties | Lahav LR vs. Israel Discount Bank | Lahav LR vs. Shikun Binui |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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