Correlation Between Levinski Ofer and Shufersal

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

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

Diversification Opportunities for Levinski Ofer and Shufersal

-0.13

Correlation Coefficient

Levinski Ofer  Shufersal

Good diversification

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

Pair Corralation between Levinski Ofer and Shufersal

Assuming the 90 days trading horizon Levinski Ofer is expected to generate 4.64 times more return on investment than Shufersal. However, Levinski Ofer is 4.64 times more volatile than Shufersal. It trades about 0.2 of its potential returns per unit of risk. Shufersal is currently generating about -0.06 per unit of risk. If you would invest  28,700  in Levinski Ofer on December 29, 2024 and sell it today you would earn a total of  23,600  from holding Levinski Ofer or generate 82.23% return on investment over 90 days.

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

Levinski Ofer  vs.  Shufersal

Levinski Ofer

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Levinski Ofer are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Levinski Ofer sustained solid returns over the last few months and may actually be approaching a breakup point.

Shufersal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shufersal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Shufersal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Levinski Ofer and Shufersal

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

The idea behind Levinski Ofer and Shufersal 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.