Correlation Between Arad Investment and Analyst IMS

Can any of the company-specific risk be diversified away by investing in both Arad Investment and Analyst IMS 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 Arad Investment and Analyst IMS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arad Investment Industrial and Analyst IMS Investment, you can compare the effects of market volatilities on Arad Investment and Analyst IMS 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 Arad Investment with a short position of Analyst IMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arad Investment and Analyst IMS.

Diversification Opportunities for Arad Investment and Analyst IMS

-0.41

Correlation Coefficient

Arad Investment  Analyst IMS

Very good diversification

The 3 months correlation between Arad and Analyst is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Arad Investment Industrial and Analyst IMS Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analyst IMS Investment and Arad Investment 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 Arad Investment Industrial are associated (or correlated) with Analyst IMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analyst IMS Investment has no effect on the direction of Arad Investment i.e., Arad Investment and Analyst IMS go up and down completely randomly.

Pair Corralation between Arad Investment and Analyst IMS

Assuming the 90 days trading horizon Arad Investment Industrial is expected to under-perform the Analyst IMS. In addition to that, Arad Investment is 1.59 times more volatile than Analyst IMS Investment. It trades about -0.18 of its total potential returns per unit of risk. Analyst IMS Investment is currently generating about 0.48 per unit of volatility. If you would invest  579,900  in Analyst IMS Investment on December 27, 2024 and sell it today you would earn a total of  340,100  from holding Analyst IMS Investment or generate 58.65% return on investment over 90 days.

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

Arad Investment Industrial  vs.  Analyst IMS Investment

Arad Investment Indu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arad Investment Industrial 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.

Analyst IMS Investment

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Analyst IMS Investment are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Analyst IMS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arad Investment and Analyst IMS

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

The idea behind Arad Investment Industrial and Analyst IMS Investment 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.