Correlation Between Gan Shmuel and Norstar

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

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

Diversification Opportunities for Gan Shmuel and Norstar

0.87

Correlation Coefficient

Gan Shmuel  Norstar

Very poor diversification

The 3 months correlation between Gan and Norstar is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gan Shmuel and Norstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norstar 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 Norstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norstar has no effect on the direction of Gan Shmuel i.e., Gan Shmuel and Norstar go up and down completely randomly.

Pair Corralation between Gan Shmuel and Norstar

Assuming the 90 days trading horizon Gan Shmuel is expected to generate 0.88 times more return on investment than Norstar. However, Gan Shmuel is 1.13 times less risky than Norstar. It trades about -0.17 of its potential returns per unit of risk. Norstar is currently generating about -0.2 per unit of risk. If you would invest  383,300  in Gan Shmuel on December 29, 2024 and sell it today you would lose (76,300) from holding Gan Shmuel or give up 19.91% of portfolio value over 90 days.

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

Gan Shmuel  vs.  Norstar

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.

Norstar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Norstar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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 Norstar

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

The idea behind Gan Shmuel and Norstar 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.