Correlation Between IMCO Industries and Bazan Oil
Can any of the company-specific risk be diversified away by investing in both IMCO Industries and Bazan Oil 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 IMCO Industries and Bazan Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMCO Industries and Bazan Oil Refineries, you can compare the effects of market volatilities on IMCO Industries and Bazan Oil 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 IMCO Industries with a short position of Bazan Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMCO Industries and Bazan Oil.
Diversification Opportunities for IMCO Industries and Bazan Oil
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IMCO and Bazan is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding IMCO Industries and Bazan Oil Refineries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bazan Oil Refineries and IMCO Industries 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 IMCO Industries are associated (or correlated) with Bazan Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bazan Oil Refineries has no effect on the direction of IMCO Industries i.e., IMCO Industries and Bazan Oil go up and down completely randomly.
Pair Corralation between IMCO Industries and Bazan Oil
Assuming the 90 days trading horizon IMCO Industries is expected to generate 3.97 times more return on investment than Bazan Oil. However, IMCO Industries is 3.97 times more volatile than Bazan Oil Refineries. It trades about 0.05 of its potential returns per unit of risk. Bazan Oil Refineries is currently generating about -0.91 per unit of risk. If you would invest 264,000 in IMCO Industries on January 25, 2024 and sell it today you would earn a total of 5,100 from holding IMCO Industries or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMCO Industries vs. Bazan Oil Refineries
Performance |
| Timeline |
| IMCO Industries |
| Bazan Oil Refineries |
IMCO Industries and Bazan Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMCO Industries and Bazan Oil
The main advantage of trading using opposite IMCO Industries and Bazan Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMCO Industries position performs unexpectedly, Bazan Oil 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 Bazan Oil will offset losses from the drop in Bazan Oil's long position.| IMCO Industries vs. Alony Hetz Properties | IMCO Industries vs. Melisron | IMCO Industries vs. Shufersal | IMCO Industries vs. Israel Discount Bank |
| Bazan Oil vs. Delek Group | Bazan Oil vs. Bank Leumi Le Israel | Bazan Oil vs. ICL Israel Chemicals | Bazan Oil vs. Bank Hapoalim |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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