Correlation Between EN Shoham and Mendelson Infrastructures

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

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

Diversification Opportunities for EN Shoham and Mendelson Infrastructures

0.04

Correlation Coefficient

EN Shoham  Mendelson Infrastructures

Significant diversification

The 3 months correlation between SHOM and Mendelson is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding EN Shoham Business and Mendelson Infrastructures and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mendelson Infrastructures and EN Shoham 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 EN Shoham Business are associated (or correlated) with Mendelson Infrastructures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mendelson Infrastructures has no effect on the direction of EN Shoham i.e., EN Shoham and Mendelson Infrastructures go up and down completely randomly.

Pair Corralation between EN Shoham and Mendelson Infrastructures

Assuming the 90 days trading horizon EN Shoham Business is expected to under-perform the Mendelson Infrastructures. But the stock apears to be less risky and, when comparing its historical volatility, EN Shoham Business is 1.53 times less risky than Mendelson Infrastructures. The stock trades about -0.22 of its potential returns per unit of risk. The Mendelson Infrastructures and is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  84,000  in Mendelson Infrastructures and on February 2, 2024 and sell it today you would earn a total of  900.00  from holding Mendelson Infrastructures and or generate 1.07% return on investment over 90 days.

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

EN Shoham Business  vs.  Mendelson Infrastructures and

EN Shoham Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EN Shoham Business has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Mendelson Infrastructures

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mendelson Infrastructures and are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mendelson Infrastructures sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EN Shoham and Mendelson Infrastructures

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

The idea behind EN Shoham Business and Mendelson Infrastructures and 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.