Correlation Between YH Dimri and ICL Israel
Can any of the company-specific risk be diversified away by investing in both YH Dimri and ICL 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 YH Dimri and ICL Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YH Dimri Construction and ICL Israel Chemicals, you can compare the effects of market volatilities on YH Dimri and ICL 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 YH Dimri with a short position of ICL Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of YH Dimri and ICL Israel.
Diversification Opportunities for YH Dimri and ICL Israel
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DIMRI and ICL is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding YH Dimri Construction and ICL Israel Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICL Israel Chemicals and YH Dimri 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 YH Dimri Construction are associated (or correlated) with ICL Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICL Israel Chemicals has no effect on the direction of YH Dimri i.e., YH Dimri and ICL Israel go up and down completely randomly.
Pair Corralation between YH Dimri and ICL Israel
Assuming the 90 days trading horizon YH Dimri Construction is expected to generate 0.64 times more return on investment than ICL Israel. However, YH Dimri Construction is 1.57 times less risky than ICL Israel. It trades about 0.23 of its potential returns per unit of risk. ICL Israel Chemicals is currently generating about -0.14 per unit of risk. If you would invest 2,900,000 in YH Dimri Construction on February 9, 2024 and sell it today you would earn a total of 140,000 from holding YH Dimri Construction or generate 4.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YH Dimri Construction vs. ICL Israel Chemicals
Performance |
| Timeline |
| YH Dimri Construction |
| ICL Israel Chemicals |
YH Dimri and ICL Israel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YH Dimri and ICL Israel
The main advantage of trading using opposite YH Dimri and ICL Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YH Dimri position performs unexpectedly, ICL 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 ICL Israel will offset losses from the drop in ICL Israel's long position.The idea behind YH Dimri Construction and ICL Israel Chemicals 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.| ICL Israel vs. Neto ME Holdings | ICL Israel vs. Aryt Industries | ICL Israel vs. Kerur Holdings | ICL Israel vs. Globrands Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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