Correlation Between LARGAN Precision and Rafael Microelectronics

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

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

Diversification Opportunities for LARGAN Precision and Rafael Microelectronics

-0.28

Correlation Coefficient

LARGAN Precision  Rafael Microelectronics

Very good diversification

The 3 months correlation between LARGAN and Rafael is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding LARGAN Precision Co and Rafael Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafael Microelectronics and LARGAN Precision 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 LARGAN Precision Co are associated (or correlated) with Rafael Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafael Microelectronics has no effect on the direction of LARGAN Precision i.e., LARGAN Precision and Rafael Microelectronics go up and down completely randomly.

Pair Corralation between LARGAN Precision and Rafael Microelectronics

If you would invest  269,000  in LARGAN Precision Co on September 14, 2024 and sell it today you would lose (15,000) from holding LARGAN Precision Co or give up 5.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

LARGAN Precision Co  vs.  Rafael Microelectronics

LARGAN Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LARGAN Precision Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, LARGAN Precision is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Rafael Microelectronics

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Rafael Microelectronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Rafael Microelectronics is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with LARGAN Precision and Rafael Microelectronics

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

The idea behind LARGAN Precision Co and Rafael Microelectronics 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 Transaction History module to view history of all your transactions and understand their impact on performance.