Correlation Between Israel Shipyards and TAT Technologies

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

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

Diversification Opportunities for Israel Shipyards and TAT Technologies

0.37

Correlation Coefficient

Israel Shipyards  TAT Technologies

Weak diversification

The 3 months correlation between Israel and TAT is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Israel Shipyards and TAT Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAT Technologies 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 TAT Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAT Technologies has no effect on the direction of Israel Shipyards i.e., Israel Shipyards and TAT Technologies go up and down completely randomly.

Pair Corralation between Israel Shipyards and TAT Technologies

Assuming the 90 days trading horizon Israel Shipyards is expected to generate 0.8 times more return on investment than TAT Technologies. However, Israel Shipyards is 1.25 times less risky than TAT Technologies. It trades about 0.13 of its potential returns per unit of risk. TAT Technologies is currently generating about 0.08 per unit of risk. If you would invest  1,013,079  in Israel Shipyards on December 29, 2024 and sell it today you would earn a total of  180,921  from holding Israel Shipyards or generate 17.86% return on investment over 90 days.

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

Israel Shipyards  vs.  TAT Technologies

Israel Shipyards

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Shipyards are ranked lower than 10 (%) 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.

TAT Technologies

Risk-Adjusted Performance

Modest

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

Pair Trading with Israel Shipyards and TAT Technologies

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

The idea behind Israel Shipyards and TAT Technologies 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..