Correlation Between Polyram Plastic and Shufersal

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

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

Diversification Opportunities for Polyram Plastic and Shufersal

0.69

Correlation Coefficient

Polyram Plastic  Shufersal

Poor diversification

The 3 months correlation between Polyram and Shufersal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Polyram Plastic Industries and Shufersal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shufersal and Polyram Plastic 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 Polyram Plastic Industries 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 Polyram Plastic i.e., Polyram Plastic and Shufersal go up and down completely randomly.

Pair Corralation between Polyram Plastic and Shufersal

Assuming the 90 days trading horizon Polyram Plastic Industries is expected to generate 1.26 times more return on investment than Shufersal. However, Polyram Plastic is 1.26 times more volatile than Shufersal. It trades about 0.46 of its potential returns per unit of risk. Shufersal is currently generating about 0.39 per unit of risk. If you would invest  113,989  in Polyram Plastic Industries on September 5, 2024 and sell it today you would earn a total of  22,011  from holding Polyram Plastic Industries or generate 19.31% return on investment over 90 days.

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

Polyram Plastic Industries  vs.  Shufersal

Polyram Plastic Indu

Risk-Adjusted Performance

20 of 100

Solid

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

Shufersal

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shufersal are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Shufersal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polyram Plastic and Shufersal

The main advantage of trading using opposite Polyram Plastic and Shufersal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polyram Plastic 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 Polyram Plastic Industries 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.