Correlation Between PCB Tec and Bank Leumi

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Can any of the company-specific risk be diversified away by investing in both PCB Tec and Bank Leumi 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 PCB Tec and Bank Leumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PCB Tec and Bank Leumi Le Israel, you can compare the effects of market volatilities on PCB Tec and Bank Leumi 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 PCB Tec with a short position of Bank Leumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCB Tec and Bank Leumi.

Diversification Opportunities for PCB Tec and Bank Leumi

-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between PCB and Bank is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding PCB Tec and Bank Leumi Le-Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Leumi Le-Israel and PCB Tec 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 PCB Tec are associated (or correlated) with Bank Leumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Leumi Le-Israel has no effect on the direction of PCB Tec i.e., PCB Tec and Bank Leumi go up and down completely randomly.

Pair Corralation between PCB Tec and Bank Leumi

Assuming the 90 days trading horizon PCB Tec is expected to under-perform the Bank Leumi. In addition to that, PCB Tec is 2.38 times more volatile than Bank Leumi Le Israel. It trades about -0.21 of its total potential returns per unit of risk. Bank Leumi Le Israel is currently generating about 0.24 per unit of volatility. If you would invest  290,638  in Bank Leumi Le Israel on December 29, 2023 and sell it today you would earn a total of  17,365  from holding Bank Leumi Le Israel or generate 5.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy94.44%
ValuesDaily Returns

PCB Tec  vs.  Bank Leumi Le-Israel

 Performance 
       Timeline  
PCB Tec 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in PCB Tec are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PCB Tec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Bank Leumi Le-Israel 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Bank Leumi Le Israel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bank Leumi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PCB Tec and Bank Leumi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PCB Tec and Bank Leumi

The main advantage of trading using opposite PCB Tec and Bank Leumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCB Tec position performs unexpectedly, Bank Leumi 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 Bank Leumi will offset losses from the drop in Bank Leumi's long position.
The idea behind PCB Tec and Bank Leumi Le Israel 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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