Correlation Between Harel Insurance and Electra Real

Can any of the company-specific risk be diversified away by investing in both Harel Insurance and Electra Real 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 Harel Insurance and Electra Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Harel Insurance Investments and Electra Real Estate, you can compare the effects of market volatilities on Harel Insurance and Electra Real 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 Harel Insurance with a short position of Electra Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harel Insurance and Electra Real.

Diversification Opportunities for Harel Insurance and Electra Real

-0.45

Correlation Coefficient

Harel Insurance  Electra Real

Very good diversification

The 3 months correlation between Harel and Electra is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Harel Insurance Investments and Electra Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra Real Estate and Harel Insurance 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 Harel Insurance Investments are associated (or correlated) with Electra Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra Real Estate has no effect on the direction of Harel Insurance i.e., Harel Insurance and Electra Real go up and down completely randomly.

Pair Corralation between Harel Insurance and Electra Real

Assuming the 90 days trading horizon Harel Insurance Investments is expected to generate 0.77 times more return on investment than Electra Real. However, Harel Insurance Investments is 1.3 times less risky than Electra Real. It trades about 0.02 of its potential returns per unit of risk. Electra Real Estate is currently generating about 0.01 per unit of risk. If you would invest  321,595  in Harel Insurance Investments on January 29, 2024 and sell it today you would earn a total of  18,405  from holding Harel Insurance Investments or generate 5.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Harel Insurance Investments  vs.  Electra Real Estate

Harel Insurance Inve

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harel Insurance Investments are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harel Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Electra Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electra Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Electra Real is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Harel Insurance and Electra Real

The main advantage of trading using opposite Harel Insurance and Electra Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harel Insurance position performs unexpectedly, Electra Real 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 Electra Real will offset losses from the drop in Electra Real's long position.

The idea behind Harel Insurance Investments and Electra Real Estate 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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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.