Correlation Between Big Shopping and Amot Investments

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

By analyzing existing cross correlation between Big Shopping Centers and Amot Investments, you can compare the effects of market volatilities on Big Shopping and Amot Investments 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 Big Shopping with a short position of Amot Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Shopping and Amot Investments.

Diversification Opportunities for Big Shopping and Amot Investments

0.88

Correlation Coefficient

Big Shopping  Amot Investments

Very poor diversification

The 3 months correlation between Big and Amot is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Big Shopping Centers and Amot Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amot Investments and Big Shopping 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 Big Shopping Centers are associated (or correlated) with Amot Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amot Investments has no effect on the direction of Big Shopping i.e., Big Shopping and Amot Investments go up and down completely randomly.

Pair Corralation between Big Shopping and Amot Investments

Assuming the 90 days trading horizon Big Shopping Centers is expected to generate 0.9 times more return on investment than Amot Investments. However, Big Shopping Centers is 1.11 times less risky than Amot Investments. It trades about 0.19 of its potential returns per unit of risk. Amot Investments is currently generating about -0.02 per unit of risk. If you would invest  4,790,000  in Big Shopping Centers on November 29, 2024 and sell it today you would earn a total of  602,000  from holding Big Shopping Centers or generate 12.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.0%
Values	Daily Returns

Big Shopping Centers  vs.  Amot Investments

Big Shopping Centers

Risk-Adjusted Performance

Good

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

Amot Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amot Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Amot Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Big Shopping and Amot Investments

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

The idea behind Big Shopping Centers and Amot Investments 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.