Correlation Between Gan Shmuel and Al Bad

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

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

Diversification Opportunities for Gan Shmuel and Al Bad

0.14

Correlation Coefficient

Gan Shmuel  Al Bad

Average diversification

The 3 months correlation between Gan and ALBA is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Gan Shmuel and Al Bad Massuot Yitzhak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Bad Massuot and Gan Shmuel 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 Gan Shmuel are associated (or correlated) with Al Bad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Bad Massuot has no effect on the direction of Gan Shmuel i.e., Gan Shmuel and Al Bad go up and down completely randomly.

Pair Corralation between Gan Shmuel and Al Bad

Assuming the 90 days trading horizon Gan Shmuel is expected to under-perform the Al Bad. But the stock apears to be less risky and, when comparing its historical volatility, Gan Shmuel is 1.1 times less risky than Al Bad. The stock trades about -0.17 of its potential returns per unit of risk. The Al Bad Massuot Yitzhak is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  193,000  in Al Bad Massuot Yitzhak on December 29, 2024 and sell it today you would lose (32,000) from holding Al Bad Massuot Yitzhak or give up 16.58% of portfolio value over 90 days.

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

Gan Shmuel  vs.  Al Bad Massuot Yitzhak

Gan Shmuel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gan Shmuel 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.

Al Bad Massuot

Risk-Adjusted Performance

Very Weak

Over the last 90 days Al Bad Massuot Yitzhak 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 Gan Shmuel and Al Bad

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

The idea behind Gan Shmuel and Al Bad Massuot Yitzhak 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.