Correlation Between Azrieli and Ari Real

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

By analyzing existing cross correlation between Azrieli Group and Ari Real Estate, you can compare the effects of market volatilities on Azrieli and Ari Real 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 Azrieli with a short position of Ari Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azrieli and Ari Real.

Diversification Opportunities for Azrieli and Ari Real

-0.48

Correlation Coefficient

Azrieli  Ari Real

Very good diversification

The 3 months correlation between Azrieli and Ari is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Azrieli Group and Ari Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ari Real Estate and Azrieli 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 Azrieli Group are associated (or correlated) with Ari Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ari Real Estate has no effect on the direction of Azrieli i.e., Azrieli and Ari Real go up and down completely randomly.

Pair Corralation between Azrieli and Ari Real

Assuming the 90 days trading horizon Azrieli Group is expected to generate 1.07 times more return on investment than Ari Real. However, Azrieli is 1.07 times more volatile than Ari Real Estate. It trades about 0.19 of its potential returns per unit of risk. Ari Real Estate is currently generating about 0.04 per unit of risk. If you would invest  2,450,000  in Azrieli Group on September 13, 2024 and sell it today you would earn a total of  434,000  from holding Azrieli Group or generate 17.71% return on investment over 90 days.

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

Azrieli Group  vs.  Ari Real Estate

Azrieli Group

Risk-Adjusted Performance

15 of 100

Good

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

Ari Real Estate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ari Real Estate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ari Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Azrieli and Ari Real

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

The idea behind Azrieli Group and Ari Real Estate 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.