Correlation Between Azrieli and Melisron

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

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

Diversification Opportunities for Azrieli and Melisron

0.48

Correlation Coefficient

Azrieli  Melisron

Very weak diversification

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

Pair Corralation between Azrieli and Melisron

Assuming the 90 days trading horizon Azrieli is expected to generate 1.1 times less return on investment than Melisron. In addition to that, Azrieli is 1.18 times more volatile than Melisron. It trades about 0.05 of its total potential returns per unit of risk. Melisron is currently generating about 0.07 per unit of volatility. If you would invest  2,175,147  in Melisron on November 28, 2024 and sell it today you would earn a total of  1,037,853  from holding Melisron or generate 47.71% return on investment over 90 days.

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

Azrieli Group  vs.  Melisron

Azrieli Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Azrieli Group 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.

Melisron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Melisron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Melisron 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 Melisron

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

The idea behind Azrieli Group and Melisron 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.