Correlation Between Israel Shipyards and Aryt Industries

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

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

Diversification Opportunities for Israel Shipyards and Aryt Industries

0.84

Correlation Coefficient

Israel Shipyards  Aryt Industries

Very poor diversification

The 3 months correlation between Israel and Aryt is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Israel Shipyards and Aryt Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aryt Industries and Israel Shipyards 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 Shipyards are associated (or correlated) with Aryt Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aryt Industries has no effect on the direction of Israel Shipyards i.e., Israel Shipyards and Aryt Industries go up and down completely randomly.

Pair Corralation between Israel Shipyards and Aryt Industries

Assuming the 90 days trading horizon Israel Shipyards is expected to generate 0.47 times more return on investment than Aryt Industries. However, Israel Shipyards is 2.11 times less risky than Aryt Industries. It trades about 0.26 of its potential returns per unit of risk. Aryt Industries is currently generating about 0.08 per unit of risk. If you would invest  591,900  in Israel Shipyards on September 2, 2024 and sell it today you would earn a total of  209,600  from holding Israel Shipyards or generate 35.41% return on investment over 90 days.

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

Israel Shipyards  vs.  Aryt Industries

Israel Shipyards

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Shipyards are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Israel Shipyards sustained solid returns over the last few months and may actually be approaching a breakup point.

Aryt Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aryt Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aryt Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Israel Shipyards and Aryt Industries

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

The idea behind Israel Shipyards and Aryt 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 Stocks Directory module to find actively traded stocks across global markets.