Correlation Between Knafaim and Orbit Technologies
Can any of the company-specific risk be diversified away by investing in both Knafaim and Orbit 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 Knafaim and Orbit Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knafaim and Orbit Technologies, you can compare the effects of market volatilities on Knafaim and Orbit 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 Knafaim with a short position of Orbit Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knafaim and Orbit Technologies.
Diversification Opportunities for Knafaim and Orbit Technologies
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Knafaim and Orbit is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Knafaim and Orbit Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbit Technologies and Knafaim 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 Knafaim are associated (or correlated) with Orbit Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbit Technologies has no effect on the direction of Knafaim i.e., Knafaim and Orbit Technologies go up and down completely randomly.
Pair Corralation between Knafaim and Orbit Technologies
Assuming the 90 days trading horizon Knafaim is expected to generate 1.0 times less return on investment than Orbit Technologies. In addition to that, Knafaim is 1.21 times more volatile than Orbit Technologies. It trades about 0.08 of its total potential returns per unit of risk. Orbit Technologies is currently generating about 0.1 per unit of volatility. If you would invest 291,000 in Orbit Technologies on December 30, 2024 and sell it today you would earn a total of 32,000 from holding Orbit Technologies or generate 11.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Knafaim vs. Orbit Technologies
Performance |
Timeline |
Knafaim |
Orbit Technologies |
Knafaim and Orbit Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Knafaim and Orbit Technologies
The main advantage of trading using opposite Knafaim and Orbit Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knafaim position performs unexpectedly, Orbit 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 Orbit Technologies will offset losses from the drop in Orbit Technologies' long position.Knafaim vs. El Al Israel | Knafaim vs. Melisron | Knafaim vs. Global Knafaim Leasing | Knafaim vs. Bezeq Israeli Telecommunication |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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