Correlation Between Automatic Bank and Palram
Can any of the company-specific risk be diversified away by investing in both Automatic Bank and Palram 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 Automatic Bank and Palram into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Bank Services and Palram, you can compare the effects of market volatilities on Automatic Bank and Palram 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 Automatic Bank with a short position of Palram. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Bank and Palram.
Diversification Opportunities for Automatic Bank and Palram
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Automatic and Palram is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Bank Services and Palram in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palram and Automatic Bank 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 Automatic Bank Services are associated (or correlated) with Palram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palram has no effect on the direction of Automatic Bank i.e., Automatic Bank and Palram go up and down completely randomly.
Pair Corralation between Automatic Bank and Palram
Assuming the 90 days trading horizon Automatic Bank is expected to generate 2.07 times less return on investment than Palram. But when comparing it to its historical volatility, Automatic Bank Services is 1.28 times less risky than Palram. It trades about 0.13 of its potential returns per unit of risk. Palram is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 275,736 in Palram on September 1, 2024 and sell it today you would earn a total of 518,764 from holding Palram or generate 188.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Bank Services vs. Palram
Performance |
| Timeline |
| Automatic Bank Services |
| Palram |
Automatic Bank and Palram Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Bank and Palram
The main advantage of trading using opposite Automatic Bank and Palram positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Bank position performs unexpectedly, Palram 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 Palram will offset losses from the drop in Palram's long position.| Automatic Bank vs. Telsys | Automatic Bank vs. EN Shoham Business | Automatic Bank vs. Brainsway | Automatic Bank vs. Mivne Real Estate |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |