Correlation Between Clal Insurance and Hiron Trade

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

By analyzing existing cross correlation between Clal Insurance Enterprises and Hiron Trade Investments Industrial, you can compare the effects of market volatilities on Clal Insurance and Hiron Trade 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 Insurance with a short position of Hiron Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and Hiron Trade.

Diversification Opportunities for Clal Insurance and Hiron Trade

0.36

Correlation Coefficient

Clal Insurance  Hiron Trade

Weak diversification

The 3 months correlation between Clal and Hiron is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Hiron Trade Investments Indust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiron Trade Investments and Clal Insurance 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 Insurance Enterprises are associated (or correlated) with Hiron Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiron Trade Investments has no effect on the direction of Clal Insurance i.e., Clal Insurance and Hiron Trade go up and down completely randomly.

Pair Corralation between Clal Insurance and Hiron Trade

Assuming the 90 days trading horizon Clal Insurance Enterprises is expected to generate 1.58 times more return on investment than Hiron Trade. However, Clal Insurance is 1.58 times more volatile than Hiron Trade Investments Industrial. It trades about 0.1 of its potential returns per unit of risk. Hiron Trade Investments Industrial is currently generating about -0.05 per unit of risk. If you would invest  834,700  in Clal Insurance Enterprises on December 29, 2024 and sell it today you would earn a total of  93,800  from holding Clal Insurance Enterprises or generate 11.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.08%
Values	Daily Returns

Clal Insurance Enterprises  vs.  Hiron Trade Investments Indust

Clal Insurance Enter

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Insurance Enterprises are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clal Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Hiron Trade Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hiron Trade Investments Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hiron Trade 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 Insurance and Hiron Trade

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

The idea behind Clal Insurance Enterprises and Hiron Trade Investments Industrial 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.