Correlation Between EN Shoham and Shagrir Group

Can any of the company-specific risk be diversified away by investing in both EN Shoham and Shagrir Group 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 Shagrir Group 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 Shagrir Group Vehicle, you can compare the effects of market volatilities on EN Shoham and Shagrir Group 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 Shagrir Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of EN Shoham and Shagrir Group.

Diversification Opportunities for EN Shoham and Shagrir Group

-0.05

Correlation Coefficient

EN Shoham  Shagrir Group

Good diversification

The 3 months correlation between SHOM and Shagrir is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding EN Shoham Business and Shagrir Group Vehicle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shagrir Group Vehicle 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 Shagrir Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shagrir Group Vehicle has no effect on the direction of EN Shoham i.e., EN Shoham and Shagrir Group go up and down completely randomly.

Pair Corralation between EN Shoham and Shagrir Group

Assuming the 90 days trading horizon EN Shoham Business is expected to generate 0.98 times more return on investment than Shagrir Group. However, EN Shoham Business is 1.02 times less risky than Shagrir Group. It trades about -0.03 of its potential returns per unit of risk. Shagrir Group Vehicle is currently generating about -0.06 per unit of risk. If you would invest  72,161  in EN Shoham Business on February 1, 2024 and sell it today you would lose (22,241) from holding EN Shoham Business or give up 30.82% of portfolio value over 90 days.

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

EN Shoham Business  vs.  Shagrir Group Vehicle

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.

Shagrir Group Vehicle

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shagrir Group Vehicle are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shagrir Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EN Shoham and Shagrir Group

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

The idea behind EN Shoham Business and Shagrir Group Vehicle 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.

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 the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.