Correlation Between Global Knafaim and TAT Technologies

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

By analyzing existing cross correlation between Global Knafaim Leasing and TAT Technologies, you can compare the effects of market volatilities on Global Knafaim and TAT Technologies 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 Global Knafaim with a short position of TAT Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Knafaim and TAT Technologies.

Diversification Opportunities for Global Knafaim and TAT Technologies

0.71

Correlation Coefficient

Global Knafaim  TAT Technologies

Poor diversification

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

Pair Corralation between Global Knafaim and TAT Technologies

Assuming the 90 days trading horizon Global Knafaim is expected to generate 17.38 times less return on investment than TAT Technologies. But when comparing it to its historical volatility, Global Knafaim Leasing is 1.83 times less risky than TAT Technologies. It trades about 0.01 of its potential returns per unit of risk. TAT Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  952,500  in TAT Technologies on December 29, 2024 and sell it today you would earn a total of  117,500  from holding TAT Technologies or generate 12.34% return on investment over 90 days.

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

Global Knafaim Leasing  vs.  TAT Technologies

Global Knafaim Leasing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Knafaim Leasing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Global Knafaim is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

TAT Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TAT Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TAT Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Knafaim and TAT Technologies

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

The idea behind Global Knafaim Leasing and TAT Technologies 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.