Correlation Between ICL Israel and KS AG

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

By analyzing existing cross correlation between ICL Israel Chemicals and KS AG DRC, you can compare the effects of market volatilities on ICL Israel and KS AG 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 ICL Israel with a short position of KS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and KS AG.

Diversification Opportunities for ICL Israel and KS AG

-0.04

Correlation Coefficient

ICL Israel  KS AG

Good diversification

The 3 months correlation between ICL and KPLUY is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and KS AG DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KS AG DRC and ICL Israel 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 ICL Israel Chemicals are associated (or correlated) with KS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KS AG DRC has no effect on the direction of ICL Israel i.e., ICL Israel and KS AG go up and down completely randomly.

Pair Corralation between ICL Israel and KS AG

Considering the 90-day investment horizon ICL Israel Chemicals is expected to generate 0.83 times more return on investment than KS AG. However, ICL Israel Chemicals is 1.2 times less risky than KS AG. It trades about 0.2 of its potential returns per unit of risk. KS AG DRC is currently generating about 0.0 per unit of risk. If you would invest  412.00  in ICL Israel Chemicals on September 1, 2024 and sell it today you would earn a total of  46.00  from holding ICL Israel Chemicals or generate 11.17% return on investment over 90 days.

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

ICL Israel Chemicals  vs.  KS AG DRC

ICL Israel Chemicals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICL Israel Chemicals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental indicators, ICL Israel may actually be approaching a critical reversion point that can send shares even higher in December 2024.

KS AG DRC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KS AG DRC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, KS AG may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ICL Israel and KS AG

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

The idea behind ICL Israel Chemicals and KS AG DRC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.