Correlation Between Rafael Holdings and SFL

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

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

Diversification Opportunities for Rafael Holdings and SFL

-0.58

Correlation Coefficient

Rafael Holdings  SFL

Excellent diversification

The 3 months correlation between Rafael and SFL is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Rafael Holdings Class and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation and Rafael Holdings 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 Rafael Holdings Class are associated (or correlated) with SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of Rafael Holdings i.e., Rafael Holdings and SFL go up and down completely randomly.

Pair Corralation between Rafael Holdings and SFL

Considering the 90-day investment horizon Rafael Holdings Class is expected to generate 2.31 times more return on investment than SFL. However, Rafael Holdings is 2.31 times more volatile than SFL Corporation. It trades about 0.08 of its potential returns per unit of risk. SFL Corporation is currently generating about -0.16 per unit of risk. If you would invest  168.00  in Rafael Holdings Class on January 19, 2024 and sell it today you would earn a total of  7.00  from holding Rafael Holdings Class or generate 4.17% return on investment over 90 days.

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

Rafael Holdings Class  vs.  SFL Corp.

Rafael Holdings Class

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Rafael Holdings Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Rafael Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

SFL Corporation

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SFL Corporation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, SFL is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Rafael Holdings and SFL

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

The idea behind Rafael Holdings Class and SFL Corporation 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.