Correlation Between Hamat and Azrieli
Can any of the company-specific risk be diversified away by investing in both Hamat and Azrieli 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 Hamat and Azrieli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hamat Group and Azrieli Group, you can compare the effects of market volatilities on Hamat and Azrieli 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 Hamat with a short position of Azrieli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamat and Azrieli.
Diversification Opportunities for Hamat and Azrieli
Poor diversification
The 3 months correlation between Hamat and Azrieli is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hamat Group and Azrieli Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azrieli Group and Hamat 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 Hamat Group are associated (or correlated) with Azrieli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azrieli Group has no effect on the direction of Hamat i.e., Hamat and Azrieli go up and down completely randomly.
Pair Corralation between Hamat and Azrieli
Assuming the 90 days trading horizon Hamat Group is expected to generate 1.45 times more return on investment than Azrieli. However, Hamat is 1.45 times more volatile than Azrieli Group. It trades about 0.13 of its potential returns per unit of risk. Azrieli Group is currently generating about 0.01 per unit of risk. If you would invest 112,100 in Hamat Group on January 26, 2024 and sell it today you would earn a total of 17,800 from holding Hamat Group or generate 15.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hamat Group vs. Azrieli Group
Performance |
| Timeline |
| Hamat Group |
| Azrieli Group |
Hamat and Azrieli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hamat and Azrieli
The main advantage of trading using opposite Hamat and Azrieli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamat position performs unexpectedly, Azrieli 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 Azrieli will offset losses from the drop in Azrieli's long position.The idea behind Hamat Group and Azrieli Group 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.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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