Correlation Between Al Bad and Gold Bond

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

Diversification Opportunities for Al Bad and Gold Bond

0.31

Correlation Coefficient

Al Bad  Gold Bond

Weak diversification

The 3 months correlation between ALBA and Gold is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Al Bad Massuot Yitzhak and The Gold Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bond 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 Gold Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bond has no effect on the direction of Al Bad i.e., Al Bad and Gold Bond go up and down completely randomly.

Pair Corralation between Al Bad and Gold Bond

Assuming the 90 days trading horizon Al Bad Massuot Yitzhak is expected to under-perform the Gold Bond. In addition to that, Al Bad is 1.18 times more volatile than The Gold Bond. It trades about -0.12 of its total potential returns per unit of risk. The Gold Bond is currently generating about 0.06 per unit of volatility. If you would invest  1,680,608  in The Gold Bond on December 29, 2024 and sell it today you would earn a total of  89,392  from holding The Gold Bond or generate 5.32% return on investment over 90 days.

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

Al Bad Massuot Yitzhak  vs.  The Gold Bond

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Gold Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Gold Bond are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gold Bond may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Al Bad and Gold Bond

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

The idea behind Al Bad Massuot Yitzhak and The Gold Bond 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.