Correlation Between Arad Investment and Tikun Olam

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

Diversification Opportunities for Arad Investment and Tikun Olam

0.5

Correlation Coefficient

Arad Investment  Tikun Olam

Very weak diversification

The 3 months correlation between Arad and Tikun is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Arad Investment Industrial and Tikun Olam Cannbit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tikun Olam Cannbit 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 Tikun Olam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tikun Olam Cannbit has no effect on the direction of Arad Investment i.e., Arad Investment and Tikun Olam go up and down completely randomly.

Pair Corralation between Arad Investment and Tikun Olam

Assuming the 90 days trading horizon Arad Investment Industrial is expected to under-perform the Tikun Olam. But the stock apears to be less risky and, when comparing its historical volatility, Arad Investment Industrial is 1.15 times less risky than Tikun Olam. The stock trades about -0.2 of its potential returns per unit of risk. The Tikun Olam Cannbit is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,580  in Tikun Olam Cannbit on December 21, 2024 and sell it today you would lose (20.00) from holding Tikun Olam Cannbit or give up 0.56% of portfolio value over 90 days.

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

Arad Investment Industrial  vs.  Tikun Olam Cannbit

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.

Tikun Olam Cannbit

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tikun Olam Cannbit are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tikun Olam is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arad Investment and Tikun Olam

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

The idea behind Arad Investment Industrial and Tikun Olam Cannbit 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.