Correlation Between Bank Hapoalim and Rimoni

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

By analyzing existing cross correlation between Bank Hapoalim and Rimoni, you can compare the effects of market volatilities on Bank Hapoalim and Rimoni 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 Bank Hapoalim with a short position of Rimoni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Hapoalim and Rimoni.

Diversification Opportunities for Bank Hapoalim and Rimoni

0.44

Correlation Coefficient

Bank Hapoalim  Rimoni

Very weak diversification

The 3 months correlation between Bank and Rimoni is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bank Hapoalim and Rimoni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimoni and Bank Hapoalim 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 Bank Hapoalim are associated (or correlated) with Rimoni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimoni has no effect on the direction of Bank Hapoalim i.e., Bank Hapoalim and Rimoni go up and down completely randomly.

Pair Corralation between Bank Hapoalim and Rimoni

Assuming the 90 days trading horizon Bank Hapoalim is expected to under-perform the Rimoni. In addition to that, Bank Hapoalim is 1.52 times more volatile than Rimoni. It trades about -0.11 of its total potential returns per unit of risk. Rimoni is currently generating about 0.08 per unit of volatility. If you would invest  523,502  in Rimoni on January 31, 2024 and sell it today you would earn a total of  8,498  from holding Rimoni or generate 1.62% return on investment over 90 days.

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

Bank Hapoalim  vs.  Rimoni

Bank Hapoalim

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Hapoalim are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bank Hapoalim may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Rimoni

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rimoni are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rimoni may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Bank Hapoalim and Rimoni

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

The idea behind Bank Hapoalim and Rimoni 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.