Correlation Between Al Bad and Salomon A

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

By analyzing existing cross correlation between Al Bad Massuot Yitzhak and Salomon A Angel, you can compare the effects of market volatilities on Al Bad and Salomon A 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 Al Bad with a short position of Salomon A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Bad and Salomon A.

Diversification Opportunities for Al Bad and Salomon A

-0.23

Correlation Coefficient

Al Bad  Salomon A

Very good diversification

The 3 months correlation between ALBA and Salomon is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Al Bad Massuot Yitzhak and Salomon A Angel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salomon A Angel and Al Bad 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 Al Bad Massuot Yitzhak are associated (or correlated) with Salomon A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salomon A Angel has no effect on the direction of Al Bad i.e., Al Bad and Salomon A go up and down completely randomly.

Pair Corralation between Al Bad and Salomon A

Assuming the 90 days trading horizon Al Bad Massuot Yitzhak is expected to generate 1.11 times more return on investment than Salomon A. However, Al Bad is 1.11 times more volatile than Salomon A Angel. It trades about 0.09 of its potential returns per unit of risk. Salomon A Angel is currently generating about -0.01 per unit of risk. If you would invest  107,300  in Al Bad Massuot Yitzhak on September 14, 2024 and sell it today you would earn a total of  71,700  from holding Al Bad Massuot Yitzhak or generate 66.82% return on investment over 90 days.

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

Al Bad Massuot Yitzhak  vs.  Salomon A Angel

Al Bad Massuot

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Al Bad Massuot Yitzhak are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Al Bad sustained solid returns over the last few months and may actually be approaching a breakup point.

Salomon A Angel

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Salomon A Angel are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Salomon A sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Al Bad and Salomon A

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

The idea behind Al Bad Massuot Yitzhak and Salomon A Angel 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.