Correlation Between Hod Assaf and MLRN Projects

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

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

Diversification Opportunities for Hod Assaf and MLRN Projects

0.79

Correlation Coefficient

Hod Assaf  MLRN Projects

Poor diversification

The 3 months correlation between Hod and MLRN is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hod Assaf Industries and MLRN Projects and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MLRN Projects and Hod Assaf 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 Hod Assaf Industries are associated (or correlated) with MLRN Projects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MLRN Projects has no effect on the direction of Hod Assaf i.e., Hod Assaf and MLRN Projects go up and down completely randomly.

Pair Corralation between Hod Assaf and MLRN Projects

Assuming the 90 days trading horizon Hod Assaf Industries is expected to under-perform the MLRN Projects. But the stock apears to be less risky and, when comparing its historical volatility, Hod Assaf Industries is 1.31 times less risky than MLRN Projects. The stock trades about -0.01 of its potential returns per unit of risk. The MLRN Projects and is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  74,310  in MLRN Projects and on November 29, 2024 and sell it today you would earn a total of  9,100  from holding MLRN Projects and or generate 12.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.04%
Values	Daily Returns

Hod Assaf Industries  vs.  MLRN Projects and

Hod Assaf Industries

Risk-Adjusted Performance

Very Weak

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

MLRN Projects

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MLRN Projects and are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MLRN Projects sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hod Assaf and MLRN Projects

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

The idea behind Hod Assaf Industries and MLRN Projects 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.