Correlation Between Isracard and Aran Research

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

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

Diversification Opportunities for Isracard and Aran Research

-0.4

Correlation Coefficient

Isracard  Aran Research

Very good diversification

The 3 months correlation between Isracard and Aran is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Isracard and Aran Research and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aran Research and Isracard 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 Isracard are associated (or correlated) with Aran Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aran Research has no effect on the direction of Isracard i.e., Isracard and Aran Research go up and down completely randomly.

Pair Corralation between Isracard and Aran Research

Assuming the 90 days trading horizon Isracard is expected to generate 1.01 times more return on investment than Aran Research. However, Isracard is 1.01 times more volatile than Aran Research and. It trades about 0.13 of its potential returns per unit of risk. Aran Research and is currently generating about -0.01 per unit of risk. If you would invest  136,300  in Isracard on September 4, 2024 and sell it today you would earn a total of  10,800  from holding Isracard or generate 7.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.83%
Values	Daily Returns

Isracard  vs.  Aran Research and

Isracard

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Isracard are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Isracard may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aran Research

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Isracard and Aran Research

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

The idea behind Isracard and Aran Research 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.