Correlation Between Gensource Potash and ICL Israel

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

Diversification Opportunities for Gensource Potash and ICL Israel

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Gensource and ICL Israel is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Gensource Potash and ICL Israel Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICL Israel Chemicals and Gensource Potash 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 Gensource Potash are associated (or correlated) with ICL Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICL Israel Chemicals has no effect on the direction of Gensource Potash i.e., Gensource Potash and ICL Israel go up and down completely randomly.

Pair Corralation between Gensource Potash and ICL Israel

Assuming the 90 days horizon Gensource Potash is expected to generate 6.6 times more return on investment than ICL Israel. However, Gensource Potash is 6.6 times more volatile than ICL Israel Chemicals. It trades about 0.04 of its potential returns per unit of risk. ICL Israel Chemicals is currently generating about 0.0 per unit of risk. If you would invest  30.00  in Gensource Potash on November 2, 2022 and sell it today you would lose (20.00)  from holding Gensource Potash or give up 66.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Gensource Potash  vs.  ICL Israel Chemicals

 Performance (%) 
       Timeline  
Gensource Potash 
Gensource Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Gensource Potash are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Gensource Potash exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gensource Price Channel

ICL Israel Chemicals 
ICL Israel Performance
0 of 100
Over the last 90 days ICL Israel Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

ICL Israel Price Channel

Gensource Potash and ICL Israel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gensource Potash and ICL Israel

The main advantage of trading using opposite Gensource Potash and ICL Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gensource Potash position performs unexpectedly, ICL Israel 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 ICL Israel will offset losses from the drop in ICL Israel's long position.
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The idea behind Gensource Potash and ICL Israel Chemicals 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.
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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 CEO Directory module to screen CEOs from public companies around the world.

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