Correlation Between Clal Industries and Amanet Management

Can any of the company-specific risk be diversified away by investing in both Clal Industries and Amanet Management 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 Amanet Management 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 Amanet Management Systems, you can compare the effects of market volatilities on Clal Industries and Amanet Management 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 Amanet Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Industries and Amanet Management.

Diversification Opportunities for Clal Industries and Amanet Management

0.58

Correlation Coefficient

Clal Industries  Amanet Management

Very weak diversification

The 3 months correlation between Clal and Amanet is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Clal Industries and and Amanet Management Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amanet Management Systems 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 Amanet Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amanet Management Systems has no effect on the direction of Clal Industries i.e., Clal Industries and Amanet Management go up and down completely randomly.

Pair Corralation between Clal Industries and Amanet Management

Assuming the 90 days trading horizon Clal Industries and is expected to generate 1.53 times more return on investment than Amanet Management. However, Clal Industries is 1.53 times more volatile than Amanet Management Systems. It trades about 0.23 of its potential returns per unit of risk. Amanet Management Systems is currently generating about 0.07 per unit of risk. If you would invest  177,900  in Clal Industries and on September 12, 2024 and sell it today you would earn a total of  48,300  from holding Clal Industries and or generate 27.15% return on investment over 90 days.

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

Clal Industries and  vs.  Amanet Management Systems

Clal Industries

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Industries and are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clal Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Amanet Management Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amanet Management Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amanet Management may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Clal Industries and Amanet Management

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

The idea behind Clal Industries and and Amanet Management Systems 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.