Correlation Between Tel Aviv and Afcon Holdings
Can any of the company-specific risk be diversified away by investing in both Tel Aviv and Afcon Holdings 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 Tel Aviv and Afcon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tel Aviv 35 and Afcon Holdings, you can compare the effects of market volatilities on Tel Aviv and Afcon Holdings 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 Tel Aviv with a short position of Afcon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tel Aviv and Afcon Holdings.
Diversification Opportunities for Tel Aviv and Afcon Holdings
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tel and Afcon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Tel Aviv 35 and Afcon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afcon Holdings and Tel Aviv 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 Tel Aviv 35 are associated (or correlated) with Afcon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afcon Holdings has no effect on the direction of Tel Aviv i.e., Tel Aviv and Afcon Holdings go up and down completely randomly.
Pair Corralation between Tel Aviv and Afcon Holdings
Assuming the 90 days trading horizon Tel Aviv is expected to generate 11.99 times less return on investment than Afcon Holdings. But when comparing it to its historical volatility, Tel Aviv 35 is 4.52 times less risky than Afcon Holdings. It trades about 0.16 of its potential returns per unit of risk. Afcon Holdings is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 977,500 in Afcon Holdings on September 3, 2024 and sell it today you would earn a total of 310,500 from holding Afcon Holdings or generate 31.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tel Aviv 35 vs. Afcon Holdings
Performance |
| Timeline |
Tel Aviv and Afcon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Tel Aviv 35
Pair trading matchups for Tel Aviv
Afcon Holdings
Pair trading matchups for Afcon Holdings
Pair Trading with Tel Aviv and Afcon Holdings
The main advantage of trading using opposite Tel Aviv and Afcon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tel Aviv position performs unexpectedly, Afcon Holdings 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 Afcon Holdings will offset losses from the drop in Afcon Holdings' long position.| Tel Aviv vs. Mobile Max M | Tel Aviv vs. Arad Investment Industrial | Tel Aviv vs. MediPress Health Limited Partnership | Tel Aviv vs. Hiron Trade Investments Industrial |
| Afcon Holdings vs. Hilan | Afcon Holdings vs. Matrix | Afcon Holdings vs. AudioCodes | Afcon Holdings vs. Tadiran Hldg |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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