Correlation Between Al Bad and Golan Plastic

Can any of the company-specific risk be diversified away by investing in both Al Bad and Golan Plastic 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 Golan Plastic 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 Golan Plastic, you can compare the effects of market volatilities on Al Bad and Golan Plastic 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 Golan Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Bad and Golan Plastic.

Diversification Opportunities for Al Bad and Golan Plastic

0.07

Correlation Coefficient

Al Bad  Golan Plastic

Significant diversification

The 3 months correlation between ALBA and Golan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Al Bad Massuot Yitzhak and Golan Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golan Plastic 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 Golan Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golan Plastic has no effect on the direction of Al Bad i.e., Al Bad and Golan Plastic go up and down completely randomly.

Pair Corralation between Al Bad and Golan Plastic

Assuming the 90 days trading horizon Al Bad Massuot Yitzhak is expected to generate 1.24 times more return on investment than Golan Plastic. However, Al Bad is 1.24 times more volatile than Golan Plastic. It trades about -0.01 of its potential returns per unit of risk. Golan Plastic is currently generating about -0.03 per unit of risk. If you would invest  182,300  in Al Bad Massuot Yitzhak on December 23, 2024 and sell it today you would lose (4,100) from holding Al Bad Massuot Yitzhak or give up 2.25% of portfolio value over 90 days.

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

Al Bad Massuot Yitzhak  vs.  Golan Plastic

Al Bad Massuot

Risk-Adjusted Performance

Very Weak

Over the last 90 days Al Bad Massuot Yitzhak has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Al Bad is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Golan Plastic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golan Plastic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Golan Plastic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Al Bad and Golan Plastic

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

The idea behind Al Bad Massuot Yitzhak and Golan Plastic 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..