Correlation Between Rimoni and Shikun Binui

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

Diversification Opportunities for Rimoni and Shikun Binui

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Rimoni and Shikun is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Rimoni and Shikun Binui in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shikun Binui 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 Shikun Binui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shikun Binui has no effect on the direction of Rimoni i.e., Rimoni and Shikun Binui go up and down completely randomly.

Pair Corralation between Rimoni and Shikun Binui

Assuming the 90 days trading horizon Rimoni is expected to generate 1.24 times more return on investment than Shikun Binui. However, Rimoni is 1.24 times more volatile than Shikun Binui. It trades about -0.06 of its potential returns per unit of risk. Shikun Binui is currently generating about -0.12 per unit of risk. If you would invest  539,900  in Rimoni on December 30, 2023 and sell it today you would lose (13,900) from holding Rimoni or give up 2.57% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Rimoni  vs.  Shikun Binui

 Performance 
       Timeline  
Rimoni 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Rimoni has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Shikun Binui 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Shikun Binui has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Rimoni and Shikun Binui Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rimoni and Shikun Binui

The main advantage of trading using opposite Rimoni and Shikun Binui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rimoni position performs unexpectedly, Shikun Binui 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 Shikun Binui will offset losses from the drop in Shikun Binui's long position.
The idea behind Rimoni and Shikun Binui 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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