Correlation Between Clal Industries and Axilion Smart

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

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

Diversification Opportunities for Clal Industries and Axilion Smart

0.71

Correlation Coefficient

Clal Industries  Axilion Smart

Poor diversification

The 3 months correlation between Clal and Axilion is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Clal Industries and and Axilion Smart Mobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axilion Smart Mobility and Clal Industries 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 Clal Industries and are associated (or correlated) with Axilion Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axilion Smart Mobility has no effect on the direction of Clal Industries i.e., Clal Industries and Axilion Smart go up and down completely randomly.

Pair Corralation between Clal Industries and Axilion Smart

Assuming the 90 days trading horizon Clal Industries and is expected to generate 0.69 times more return on investment than Axilion Smart. However, Clal Industries and is 1.46 times less risky than Axilion Smart. It trades about -0.1 of its potential returns per unit of risk. Axilion Smart Mobility is currently generating about -0.26 per unit of risk. If you would invest  217,000  in Clal Industries and on December 27, 2024 and sell it today you would lose (28,000) from holding Clal Industries and or give up 12.9% of portfolio value over 90 days.

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

Clal Industries and  vs.  Axilion Smart Mobility

Clal Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clal Industries and 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.

Axilion Smart Mobility

Risk-Adjusted Performance

Very Weak

Over the last 90 days Axilion Smart Mobility 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.

Pair Trading with Clal Industries and Axilion Smart

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

The idea behind Clal Industries and and Axilion Smart Mobility 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.