Correlation Between Clal Industries and Norstar

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

Diversification Opportunities for Clal Industries and Norstar

0.74

Correlation Coefficient

Clal Industries  Norstar

Poor diversification

The 3 months correlation between Clal and Norstar is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Clal Industries and and Norstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norstar 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 Norstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norstar has no effect on the direction of Clal Industries i.e., Clal Industries and Norstar go up and down completely randomly.

Pair Corralation between Clal Industries and Norstar

Assuming the 90 days trading horizon Clal Industries and is expected to generate 0.92 times more return on investment than Norstar. However, Clal Industries and is 1.09 times less risky than Norstar. It trades about -0.1 of its potential returns per unit of risk. Norstar is currently generating about -0.2 per unit of risk. If you would invest  217,000  in Clal Industries and on December 30, 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.  Norstar

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.

Norstar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Norstar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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 Norstar

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

The idea behind Clal Industries and and Norstar 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.