Correlation Between El Al and Qualitau

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

By analyzing existing cross correlation between El Al Israel and Qualitau, you can compare the effects of market volatilities on El Al and Qualitau 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 El Al with a short position of Qualitau. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Al and Qualitau.

Diversification Opportunities for El Al and Qualitau

0.86

Correlation Coefficient

El Al  Qualitau

Very poor diversification

The 3 months correlation between ELAL and Qualitau is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel and Qualitau in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualitau and El Al 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 El Al Israel are associated (or correlated) with Qualitau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualitau has no effect on the direction of El Al i.e., El Al and Qualitau go up and down completely randomly.

Pair Corralation between El Al and Qualitau

Assuming the 90 days trading horizon El Al is expected to generate 1.61 times less return on investment than Qualitau. In addition to that, El Al is 1.1 times more volatile than Qualitau. It trades about 0.11 of its total potential returns per unit of risk. Qualitau is currently generating about 0.2 per unit of volatility. If you would invest  298,213  in Qualitau on November 20, 2024 and sell it today you would earn a total of  2,562,787  from holding Qualitau or generate 859.38% return on investment over 90 days.

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

El Al Israel  vs.  Qualitau

El Al Israel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in El Al Israel are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, El Al sustained solid returns over the last few months and may actually be approaching a breakup point.

Qualitau

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qualitau are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qualitau sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with El Al and Qualitau

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

The idea behind El Al Israel and Qualitau 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.