Correlation Between GODM Investments and Clal Industries

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

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

Diversification Opportunities for GODM Investments and Clal Industries

-0.54

Correlation Coefficient

GODM Investments  Clal Industries

Excellent diversification

The 3 months correlation between GODM and Clal is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding GODM Investments and Clal Industries and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Industries and GODM Investments 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 GODM Investments are associated (or correlated) with Clal Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Industries has no effect on the direction of GODM Investments i.e., GODM Investments and Clal Industries go up and down completely randomly.

Pair Corralation between GODM Investments and Clal Industries

Assuming the 90 days trading horizon GODM Investments is expected to generate 5.27 times more return on investment than Clal Industries. However, GODM Investments is 5.27 times more volatile than Clal Industries and. It trades about 0.21 of its potential returns per unit of risk. Clal Industries and is currently generating about -0.1 per unit of risk. If you would invest  2,900  in GODM Investments on December 28, 2024 and sell it today you would earn a total of  5,410  from holding GODM Investments or generate 186.55% return on investment over 90 days.

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

GODM Investments  vs.  Clal Industries and

GODM Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GODM Investments are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GODM Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with GODM Investments and Clal Industries

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

The idea behind GODM Investments and Clal Industries and 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.