Correlation Between Inter Industries and Bazan Oil
Can any of the company-specific risk be diversified away by investing in both Inter 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 Inter 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 Inter Industries and Bazan Oil Refineries, you can compare the effects of market volatilities on Inter 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 Inter Industries with a short position of Bazan Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Industries and Bazan Oil.
Diversification Opportunities for Inter Industries and Bazan Oil
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Inter and Bazan is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Inter 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 Inter 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 Inter 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 Inter Industries i.e., Inter Industries and Bazan Oil go up and down completely randomly.
Pair Corralation between Inter Industries and Bazan Oil
Assuming the 90 days trading horizon Inter Industries is expected to generate 1.06 times more return on investment than Bazan Oil. However, Inter Industries is 1.06 times more volatile than Bazan Oil Refineries. It trades about 0.18 of its potential returns per unit of risk. Bazan Oil Refineries is currently generating about -0.45 per unit of risk. If you would invest 26,370 in Inter Industries on January 19, 2024 and sell it today you would earn a total of 2,790 from holding Inter Industries or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inter Industries vs. Bazan Oil Refineries
Performance |
| Timeline |
| Inter Industries |
| Bazan Oil Refineries |
Inter Industries and Bazan Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inter Industries and Bazan Oil
The main advantage of trading using opposite Inter Industries and Bazan Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter 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.| Inter Industries vs. Automatic Bank Services | Inter Industries vs. EN Shoham Business | Inter Industries vs. Rapac Communication Infrastructure | Inter Industries vs. Tadiran Hldg |
| Bazan Oil vs. Fattal 1998 Holdings | Bazan Oil vs. El Al Israel | Bazan Oil vs. Bank Leumi Le Israel | Bazan Oil vs. Teva Pharmaceutical Industries |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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