Correlation Between ZION OIL and Lapidoth

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

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

Diversification Opportunities for ZION OIL and Lapidoth

-0.58

Correlation Coefficient

ZION OIL  Lapidoth

Excellent diversification

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

Pair Corralation between ZION OIL and Lapidoth

Assuming the 90 days trading horizon ZION OIL GAS is expected to under-perform the Lapidoth. In addition to that, ZION OIL is 1.95 times more volatile than Lapidoth. It trades about -0.02 of its total potential returns per unit of risk. Lapidoth is currently generating about 0.02 per unit of volatility. If you would invest  641,478  in Lapidoth on September 12, 2024 and sell it today you would earn a total of  53,522  from holding Lapidoth or generate 8.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.26%
Values	Daily Returns

ZION OIL GAS  vs.  Lapidoth

ZION OIL GAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZION OIL GAS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Lapidoth

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lapidoth are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lapidoth sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZION OIL and Lapidoth

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

The idea behind ZION OIL GAS and Lapidoth 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.