Correlation Between Rimoni and Kafrit
Can any of the company-specific risk be diversified away by investing in both Rimoni and Kafrit 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 Rimoni and Kafrit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rimoni and Kafrit, you can compare the effects of market volatilities on Rimoni and Kafrit 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 Rimoni with a short position of Kafrit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rimoni and Kafrit.
Diversification Opportunities for Rimoni and Kafrit
Modest diversification
The 3 months correlation between Rimoni and Kafrit is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Rimoni and Kafrit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kafrit and Rimoni 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 Rimoni are associated (or correlated) with Kafrit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kafrit has no effect on the direction of Rimoni i.e., Rimoni and Kafrit go up and down completely randomly.
Pair Corralation between Rimoni and Kafrit
Assuming the 90 days trading horizon Rimoni is expected to generate 2.33 times less return on investment than Kafrit. In addition to that, Rimoni is 1.76 times more volatile than Kafrit. It trades about 0.05 of its total potential returns per unit of risk. Kafrit is currently generating about 0.2 per unit of volatility. If you would invest 177,427 in Kafrit on January 20, 2024 and sell it today you would earn a total of 7,573 from holding Kafrit or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rimoni vs. Kafrit
Performance |
| Timeline |
| Rimoni |
| Kafrit |
Rimoni and Kafrit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rimoni and Kafrit
The main advantage of trading using opposite Rimoni and Kafrit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rimoni position performs unexpectedly, Kafrit 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 Kafrit will offset losses from the drop in Kafrit's long position.| Rimoni vs. Elbit Systems | Rimoni vs. Bezeq Israeli Telecommunication | Rimoni vs. Bank Hapoalim | Rimoni vs. Teva Pharmaceutical Industries |
| Kafrit vs. Elbit Systems | Kafrit vs. Bezeq Israeli Telecommunication | Kafrit vs. Bank Hapoalim | Kafrit 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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