Correlation Between Israel and Asia Carbon

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

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

Diversification Opportunities for Israel and Asia Carbon

0.0

Correlation Coefficient

Israel  Asia Carbon

Pay attention - limited upside

The 3 months correlation between Israel and Asia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Israel and Asia Carbon Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Carbon Industries and 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 Israel are associated (or correlated) with Asia Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Carbon Industries has no effect on the direction of Israel i.e., Israel and Asia Carbon go up and down completely randomly.

Pair Corralation between Israel and Asia Carbon

If you would invest  52,500  in Israel on October 10, 2024 and sell it today you would lose (8,000) from holding Israel or give up 15.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	65.86%
Values	Daily Returns

Israel  vs.  Asia Carbon Industries

Israel

Risk-Adjusted Performance

11 of 100

Good

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

Asia Carbon Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Israel and Asia Carbon

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

The idea behind Israel and Asia Carbon Industries 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.