Correlation Between Ituran Location and Aldel Financial

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

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

Diversification Opportunities for Ituran Location and Aldel Financial

0.13

Correlation Coefficient

Ituran Location  Aldel Financial

Average diversification

The 3 months correlation between Ituran and Aldel is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ituran Location and and Aldel Financial II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldel Financial II and Ituran Location 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 Ituran Location and are associated (or correlated) with Aldel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldel Financial II has no effect on the direction of Ituran Location i.e., Ituran Location and Aldel Financial go up and down completely randomly.

Pair Corralation between Ituran Location and Aldel Financial

Given the investment horizon of 90 days Ituran Location and is expected to generate 11.59 times more return on investment than Aldel Financial. However, Ituran Location is 11.59 times more volatile than Aldel Financial II. It trades about 0.07 of its potential returns per unit of risk. Aldel Financial II is currently generating about 0.07 per unit of risk. If you would invest  2,024  in Ituran Location and on October 5, 2024 and sell it today you would earn a total of  1,123  from holding Ituran Location and or generate 55.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	10.5%
Values	Daily Returns

Ituran Location and  vs.  Aldel Financial II

Ituran Location

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ituran Location and are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Ituran Location displayed solid returns over the last few months and may actually be approaching a breakup point.

Aldel Financial II

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ituran Location and Aldel Financial

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

The idea behind Ituran Location and and Aldel Financial II 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.