Correlation Between Sika AG and Israel
Can any of the company-specific risk be diversified away by investing in both Sika AG and Israel 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 Sika AG and Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sika AG ADR and Israel, you can compare the effects of market volatilities on Sika AG and Israel 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 Sika AG with a short position of Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sika AG and Israel.
Diversification Opportunities for Sika AG and Israel
Very good diversification
The 3 months correlation between Sika and Israel is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sika AG ADR and Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel and Sika AG 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 Sika AG ADR are associated (or correlated) with Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel has no effect on the direction of Sika AG i.e., Sika AG and Israel go up and down completely randomly.
Pair Corralation between Sika AG and Israel
Assuming the 90 days horizon Sika AG ADR is expected to under-perform the Israel. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sika AG ADR is 6.77 times less risky than Israel. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Israel is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 21,900 in Israel on December 5, 2024 and sell it today you would earn a total of 6,600 from holding Israel or generate 30.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sika AG ADR vs. Israel
Performance |
| Timeline |
| Sika AG ADR |
| Israel |
Sika AG and Israel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sika AG and Israel
The main advantage of trading using opposite Sika AG and Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sika AG position performs unexpectedly, Israel 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 Israel will offset losses from the drop in Israel's long position.The idea behind Sika AG ADR and Israel 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.| Israel vs. EastGroup Properties | ||
| Israel vs. Nasdaq Inc | ||
| Israel vs. Treasury Wine Estates | ||
| Israel vs. Transcontinental Realty Investors |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |