Correlation Between Altshuler Shaham and ICL Israel

Can any of the company-specific risk be diversified away by investing in both Altshuler Shaham and ICL Israel 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 Altshuler Shaham and ICL Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altshuler Shaham Financial and ICL Israel Chemicals, you can compare the effects of market volatilities on Altshuler Shaham and ICL Israel 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 Altshuler Shaham with a short position of ICL Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altshuler Shaham and ICL Israel.

Diversification Opportunities for Altshuler Shaham and ICL Israel

-0.6

Correlation Coefficient

Altshuler Shaham  ICL Israel

Excellent diversification

The 3 months correlation between Altshuler and ICL is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Altshuler Shaham Financial and ICL Israel Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICL Israel Chemicals and Altshuler Shaham 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 Altshuler Shaham Financial are associated (or correlated) with ICL Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICL Israel Chemicals has no effect on the direction of Altshuler Shaham i.e., Altshuler Shaham and ICL Israel go up and down completely randomly.

Pair Corralation between Altshuler Shaham and ICL Israel

Assuming the 90 days trading horizon Altshuler Shaham Financial is expected to under-perform the ICL Israel. But the stock apears to be less risky and, when comparing its historical volatility, Altshuler Shaham Financial is 1.04 times less risky than ICL Israel. The stock trades about -0.07 of its potential returns per unit of risk. The ICL Israel Chemicals is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  172,363  in ICL Israel Chemicals on December 29, 2024 and sell it today you would earn a total of  41,537  from holding ICL Israel Chemicals or generate 24.1% return on investment over 90 days.

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

Altshuler Shaham Financial  vs.  ICL Israel Chemicals

Altshuler Shaham Fin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Altshuler Shaham Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

ICL Israel Chemicals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ICL Israel Chemicals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, ICL Israel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altshuler Shaham and ICL Israel

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

The idea behind Altshuler Shaham Financial and ICL Israel Chemicals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.