Correlation Between Ege Gubre and ICL Israel

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

Diversification Opportunities for Ege Gubre and ICL Israel

-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between EGGUB and ICL Israel is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ege Gubre Sanayi 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 Ege Gubre 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 Ege Gubre Sanayi 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 Ege Gubre i.e., Ege Gubre and ICL Israel go up and down completely randomly.

Pair Corralation between Ege Gubre and ICL Israel

Assuming the 90 days trading horizon Ege Gubre Sanayi is expected to under-perform the ICL Israel. In addition to that, Ege Gubre is 2.4 times more volatile than ICL Israel Chemicals. It trades about -0.27 of its total potential returns per unit of risk. ICL Israel Chemicals is currently generating about 0.27 per unit of volatility. If you would invest  728.00  in ICL Israel Chemicals on November 2, 2022 and sell it today you would earn a total of  65.50  from holding ICL Israel Chemicals or generate 9.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy86.36%
ValuesDaily Returns

Ege Gubre Sanayi  vs.  ICL Israel Chemicals

 Performance (%) 
       Timeline  
Ege Gubre Sanayi 
EGGUB Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ege Gubre Sanayi are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Ege Gubre may actually be approaching a critical reversion point that can send shares even higher in March 2023.

EGGUB 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 relatively steady fundamental indicators, ICL Israel is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

ICL Israel Price Channel

Ege Gubre and ICL Israel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ege Gubre and ICL Israel

The main advantage of trading using opposite Ege Gubre and ICL Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ege Gubre 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 Ege Gubre Sanayi 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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