Correlation Between Mendelson Infrastructures and Klil Industries

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

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

Diversification Opportunities for Mendelson Infrastructures and Klil Industries

0.7

Correlation Coefficient

Mendelson Infrastructures  Klil Industries

Poor diversification

The 3 months correlation between Mendelson and Klil is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mendelson Infrastructures and and Klil Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klil Industries and Mendelson Infrastructures 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 Mendelson Infrastructures and are associated (or correlated) with Klil Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klil Industries has no effect on the direction of Mendelson Infrastructures i.e., Mendelson Infrastructures and Klil Industries go up and down completely randomly.

Pair Corralation between Mendelson Infrastructures and Klil Industries

Assuming the 90 days trading horizon Mendelson Infrastructures and is expected to generate 1.01 times more return on investment than Klil Industries. However, Mendelson Infrastructures is 1.01 times more volatile than Klil Industries. It trades about 0.32 of its potential returns per unit of risk. Klil Industries is currently generating about 0.26 per unit of risk. If you would invest  87,300  in Mendelson Infrastructures and on September 5, 2024 and sell it today you would earn a total of  47,700  from holding Mendelson Infrastructures and or generate 54.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.83%
Values	Daily Returns

Mendelson Infrastructures and  vs.  Klil Industries

Mendelson Infrastructures

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mendelson Infrastructures and are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mendelson Infrastructures sustained solid returns over the last few months and may actually be approaching a breakup point.

Klil Industries

Risk-Adjusted Performance

20 of 100

Solid

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

Pair Trading with Mendelson Infrastructures and Klil Industries

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

The idea behind Mendelson Infrastructures and and Klil 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.