Correlation Between Israel Canada and Ashtrom

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

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

Diversification Opportunities for Israel Canada and Ashtrom

0.76

Correlation Coefficient

Israel Canada  Ashtrom

Poor diversification

The 3 months correlation between Israel and Ashtrom is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Israel Canada and Ashtrom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtrom Group and Israel Canada 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 Canada are associated (or correlated) with Ashtrom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtrom Group has no effect on the direction of Israel Canada i.e., Israel Canada and Ashtrom go up and down completely randomly.

Pair Corralation between Israel Canada and Ashtrom

Assuming the 90 days trading horizon Israel Canada is expected to generate 1.39 times more return on investment than Ashtrom. However, Israel Canada is 1.39 times more volatile than Ashtrom Group. It trades about -0.12 of its potential returns per unit of risk. Ashtrom Group is currently generating about -0.17 per unit of risk. If you would invest  142,000  in Israel Canada on December 30, 2024 and sell it today you would lose (24,600) from holding Israel Canada or give up 17.32% of portfolio value over 90 days.

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

Israel Canada  vs.  Ashtrom Group

Israel Canada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Israel Canada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ashtrom Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashtrom Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Israel Canada and Ashtrom

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

The idea behind Israel Canada and Ashtrom Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.