Correlation Between Israel Land and EN Shoham

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

By analyzing existing cross correlation between Israel Land Development and EN Shoham Business, you can compare the effects of market volatilities on Israel Land and EN Shoham 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 Israel Land with a short position of EN Shoham. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Land and EN Shoham.

Diversification Opportunities for Israel Land and EN Shoham

-0.35

Correlation Coefficient

Israel Land  EN Shoham

Very good diversification

The 3 months correlation between Israel and SHOM is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Israel Land Development and EN Shoham Business in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EN Shoham Business and Israel Land 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 Israel Land Development are associated (or correlated) with EN Shoham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EN Shoham Business has no effect on the direction of Israel Land i.e., Israel Land and EN Shoham go up and down completely randomly.

Pair Corralation between Israel Land and EN Shoham

Assuming the 90 days trading horizon Israel Land Development is expected to under-perform the EN Shoham. But the stock apears to be less risky and, when comparing its historical volatility, Israel Land Development is 1.22 times less risky than EN Shoham. The stock trades about -0.09 of its potential returns per unit of risk. The EN Shoham Business is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  79,800  in EN Shoham Business on December 30, 2024 and sell it today you would earn a total of  3,290  from holding EN Shoham Business or generate 4.12% return on investment over 90 days.

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

Israel Land Development  vs.  EN Shoham Business

Israel Land Development

Risk-Adjusted Performance

Very Weak

Over the last 90 days Israel Land Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

EN Shoham Business

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EN Shoham Business are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EN Shoham may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Israel Land and EN Shoham

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

The idea behind Israel Land Development and EN Shoham Business 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.