Correlation Between Gan Shmuel and Clal Industries

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

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

Diversification Opportunities for Gan Shmuel and Clal Industries

0.68

Correlation Coefficient

Gan Shmuel  Clal Industries

Poor diversification

The 3 months correlation between Gan and Clal is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gan Shmuel and Clal Industries and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Industries 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 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 Gan Shmuel i.e., Gan Shmuel and Clal Industries go up and down completely randomly.

Pair Corralation between Gan Shmuel and Clal Industries

Assuming the 90 days trading horizon Gan Shmuel is expected to generate 1.05 times more return on investment than Clal Industries. However, Gan Shmuel is 1.05 times more volatile than Clal Industries and. It trades about 0.24 of its potential returns per unit of risk. Clal Industries and is currently generating about 0.04 per unit of risk. If you would invest  139,515  in Gan Shmuel on September 13, 2024 and sell it today you would earn a total of  252,385  from holding Gan Shmuel or generate 180.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.48%
Values	Daily Returns

Gan Shmuel  vs.  Clal Industries and

Gan Shmuel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gan Shmuel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gan Shmuel sustained solid returns over the last few months and may actually be approaching a breakup point.

Clal Industries

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Industries and are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clal Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gan Shmuel and Clal Industries

The main advantage of trading using opposite Gan Shmuel and Clal Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gan Shmuel 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 Gan Shmuel 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.