Correlation Between Harel Insurance and Rimon Consulting

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

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

Diversification Opportunities for Harel Insurance and Rimon Consulting

0.23

Correlation Coefficient

Harel Insurance  Rimon Consulting

Modest diversification

The 3 months correlation between Harel and Rimon is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Harel Insurance Investments and Rimon Consulting Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimon Consulting Man and Harel Insurance 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 Harel Insurance Investments are associated (or correlated) with Rimon Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimon Consulting Man has no effect on the direction of Harel Insurance i.e., Harel Insurance and Rimon Consulting go up and down completely randomly.

Pair Corralation between Harel Insurance and Rimon Consulting

Assuming the 90 days trading horizon Harel Insurance Investments is expected to generate 0.84 times more return on investment than Rimon Consulting. However, Harel Insurance Investments is 1.19 times less risky than Rimon Consulting. It trades about 0.23 of its potential returns per unit of risk. Rimon Consulting Management is currently generating about -0.03 per unit of risk. If you would invest  502,920  in Harel Insurance Investments on December 22, 2024 and sell it today you would earn a total of  129,980  from holding Harel Insurance Investments or generate 25.85% return on investment over 90 days.

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

Harel Insurance Investments  vs.  Rimon Consulting Management

Harel Insurance Inve

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harel Insurance Investments are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harel Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Rimon Consulting Man

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Harel Insurance and Rimon Consulting

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

The idea behind Harel Insurance Investments and Rimon Consulting Management 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.

Check out your portfolio center.

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.