Correlation Between Adgar Investments and Elbit Imaging

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

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

Diversification Opportunities for Adgar Investments and Elbit Imaging

0.75

Correlation Coefficient

Adgar Investments  Elbit Imaging

Poor diversification

The 3 months correlation between Adgar and Elbit is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Adgar Investments and and Elbit Imaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Imaging and Adgar Investments 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 Adgar Investments and are associated (or correlated) with Elbit Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Imaging has no effect on the direction of Adgar Investments i.e., Adgar Investments and Elbit Imaging go up and down completely randomly.

Pair Corralation between Adgar Investments and Elbit Imaging

Assuming the 90 days trading horizon Adgar Investments is expected to generate 5.04 times less return on investment than Elbit Imaging. But when comparing it to its historical volatility, Adgar Investments and is 3.27 times less risky than Elbit Imaging. It trades about 0.3 of its potential returns per unit of risk. Elbit Imaging is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  49,000  in Elbit Imaging on October 9, 2024 and sell it today you would earn a total of  11,000  from holding Elbit Imaging or generate 22.45% return on investment over 90 days.

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

Adgar Investments and  vs.  Elbit Imaging

Adgar Investments

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Adgar Investments and are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Adgar Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Elbit Imaging

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Imaging are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Elbit Imaging unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adgar Investments and Elbit Imaging

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

The idea behind Adgar Investments and and Elbit Imaging 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.