Correlation Between Ashot Ashkelon and Knafaim

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

By analyzing existing cross correlation between Ashot Ashkelon Industries and Knafaim, you can compare the effects of market volatilities on Ashot Ashkelon and Knafaim 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 Ashot Ashkelon with a short position of Knafaim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashot Ashkelon and Knafaim.

Diversification Opportunities for Ashot Ashkelon and Knafaim

0.69

Correlation Coefficient

Ashot Ashkelon  Knafaim

Poor diversification

The 3 months correlation between Ashot and Knafaim is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ashot Ashkelon Industries and Knafaim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knafaim and Ashot Ashkelon 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 Ashot Ashkelon Industries are associated (or correlated) with Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knafaim has no effect on the direction of Ashot Ashkelon i.e., Ashot Ashkelon and Knafaim go up and down completely randomly.

Pair Corralation between Ashot Ashkelon and Knafaim

Assuming the 90 days trading horizon Ashot Ashkelon is expected to generate 2.16 times less return on investment than Knafaim. In addition to that, Ashot Ashkelon is 1.56 times more volatile than Knafaim. It trades about 0.05 of its total potential returns per unit of risk. Knafaim is currently generating about 0.18 per unit of volatility. If you would invest  137,000  in Knafaim on December 1, 2024 and sell it today you would earn a total of  32,800  from holding Knafaim or generate 23.94% return on investment over 90 days.

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

Ashot Ashkelon Industries  vs.  Knafaim

Ashot Ashkelon Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ashot Ashkelon Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ashot Ashkelon sustained solid returns over the last few months and may actually be approaching a breakup point.

Knafaim

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Knafaim are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Knafaim sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ashot Ashkelon and Knafaim

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

The idea behind Ashot Ashkelon Industries and Knafaim 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.