Correlation Between Plasson Indus and Ayalon Holdings
Can any of the company-specific risk be diversified away by investing in both Plasson Indus and Ayalon Holdings 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 Plasson Indus and Ayalon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plasson Indus and Ayalon Holdings, you can compare the effects of market volatilities on Plasson Indus and Ayalon Holdings 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 Plasson Indus with a short position of Ayalon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plasson Indus and Ayalon Holdings.
Diversification Opportunities for Plasson Indus and Ayalon Holdings
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Plasson and Ayalon is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Plasson Indus and Ayalon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayalon Holdings and Plasson Indus 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 Plasson Indus are associated (or correlated) with Ayalon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayalon Holdings has no effect on the direction of Plasson Indus i.e., Plasson Indus and Ayalon Holdings go up and down completely randomly.
Pair Corralation between Plasson Indus and Ayalon Holdings
Assuming the 90 days trading horizon Plasson Indus is expected to generate 0.75 times more return on investment than Ayalon Holdings. However, Plasson Indus is 1.33 times less risky than Ayalon Holdings. It trades about -0.07 of its potential returns per unit of risk. Ayalon Holdings is currently generating about -0.17 per unit of risk. If you would invest 1,500,000 in Plasson Indus on February 10, 2024 and sell it today you would lose (42,000) from holding Plasson Indus or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plasson Indus vs. Ayalon Holdings
Performance |
| Timeline |
| Plasson Indus |
| Ayalon Holdings |
Plasson Indus and Ayalon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plasson Indus and Ayalon Holdings
The main advantage of trading using opposite Plasson Indus and Ayalon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plasson Indus position performs unexpectedly, Ayalon Holdings 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 Ayalon Holdings will offset losses from the drop in Ayalon Holdings' long position.| Plasson Indus vs. Clal Insurance Enterprises | Plasson Indus vs. Israel Discount Bank | Plasson Indus vs. Migdal Insurance | Plasson Indus vs. Bezeq Israeli Telecommunication |
| Ayalon Holdings vs. Migdal Insurance | Ayalon Holdings vs. Harel Insurance Investments | Ayalon Holdings vs. Israel Discount Bank |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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