Correlation Between Clal Industries and Sure Tech

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

Diversification Opportunities for Clal Industries and Sure Tech

-0.06

Correlation Coefficient

Clal Industries  Sure Tech

Good diversification

The 3 months correlation between Clal and Sure is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Clal Industries and and Sure Tech Investments LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sure Tech Investments 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 Sure Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sure Tech Investments has no effect on the direction of Clal Industries i.e., Clal Industries and Sure Tech go up and down completely randomly.

Pair Corralation between Clal Industries and Sure Tech

Assuming the 90 days trading horizon Clal Industries and is expected to generate 0.88 times more return on investment than Sure Tech. However, Clal Industries and is 1.14 times less risky than Sure Tech. It trades about 0.29 of its potential returns per unit of risk. Sure Tech Investments LP is currently generating about 0.04 per unit of risk. If you would invest  168,600  in Clal Industries and on September 13, 2024 and sell it today you would earn a total of  57,400  from holding Clal Industries and or generate 34.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.83%
Values	Daily Returns

Clal Industries and  vs.  Sure Tech Investments LP

Clal Industries

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Industries and are ranked lower than 22 (%) 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.

Sure Tech Investments

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sure Tech Investments LP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sure Tech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Clal Industries and Sure Tech

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

The idea behind Clal Industries and and Sure Tech Investments LP 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.