Correlation Between Clal Industries and Global Knafaim

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

Diversification Opportunities for Clal Industries and Global Knafaim

0.71

Correlation Coefficient

Clal Industries  Global Knafaim

Poor diversification

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

Pair Corralation between Clal Industries and Global Knafaim

Assuming the 90 days trading horizon Clal Industries is expected to generate 3.75 times less return on investment than Global Knafaim. In addition to that, Clal Industries is 1.13 times more volatile than Global Knafaim Leasing. It trades about 0.02 of its total potential returns per unit of risk. Global Knafaim Leasing is currently generating about 0.07 per unit of volatility. If you would invest  4,780  in Global Knafaim Leasing on October 9, 2024 and sell it today you would earn a total of  3,410  from holding Global Knafaim Leasing or generate 71.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.75%
Values	Daily Returns

Clal Industries and  vs.  Global Knafaim Leasing

Clal Industries

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Industries and are ranked lower than 15 (%) 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.

Global Knafaim Leasing

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Knafaim Leasing are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Global Knafaim sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clal Industries and Global Knafaim

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

The idea behind Clal Industries and and Global Knafaim Leasing 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.