Correlation Between Rafael Microelectronics and Ablerex Electronics

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

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

Diversification Opportunities for Rafael Microelectronics and Ablerex Electronics

-0.62

Correlation Coefficient

Rafael Microelectronics  Ablerex Electronics

Excellent diversification

The 3 months correlation between Rafael and Ablerex is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Rafael Microelectronics and Ablerex Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ablerex Electronics and Rafael Microelectronics 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 Microelectronics are associated (or correlated) with Ablerex Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ablerex Electronics has no effect on the direction of Rafael Microelectronics i.e., Rafael Microelectronics and Ablerex Electronics go up and down completely randomly.

Pair Corralation between Rafael Microelectronics and Ablerex Electronics

Assuming the 90 days trading horizon Rafael Microelectronics is expected to under-perform the Ablerex Electronics. In addition to that, Rafael Microelectronics is 1.1 times more volatile than Ablerex Electronics Co. It trades about -0.01 of its total potential returns per unit of risk. Ablerex Electronics Co is currently generating about 0.02 per unit of volatility. If you would invest  4,275  in Ablerex Electronics Co on September 24, 2024 and sell it today you would earn a total of  410.00  from holding Ablerex Electronics Co or generate 9.59% return on investment over 90 days.

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

Rafael Microelectronics  vs.  Ablerex Electronics Co

Rafael Microelectronics

Risk-Adjusted Performance

0 of 100

Very 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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ablerex Electronics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ablerex Electronics Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ablerex Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rafael Microelectronics and Ablerex Electronics

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

The idea behind Rafael Microelectronics and Ablerex Electronics Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.