Correlation Between Shufersal and Harel Insurance

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

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

Diversification Opportunities for Shufersal and Harel Insurance

0.66

Correlation Coefficient

Shufersal  Harel Insurance

Poor diversification

The 3 months correlation between Shufersal and Harel is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shufersal and Harel Insurance Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harel Insurance Inve and Shufersal 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 Shufersal are associated (or correlated) with Harel Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harel Insurance Inve has no effect on the direction of Shufersal i.e., Shufersal and Harel Insurance go up and down completely randomly.

Pair Corralation between Shufersal and Harel Insurance

Assuming the 90 days trading horizon Shufersal is expected to generate 9.18 times less return on investment than Harel Insurance. But when comparing it to its historical volatility, Shufersal is 1.38 times less risky than Harel Insurance. It trades about 0.05 of its potential returns per unit of risk. Harel Insurance Investments is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  427,394  in Harel Insurance Investments on November 28, 2024 and sell it today you would earn a total of  150,606  from holding Harel Insurance Investments or generate 35.24% return on investment over 90 days.

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

Shufersal  vs.  Harel Insurance Investments

Shufersal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shufersal are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Harel Insurance Inve

Risk-Adjusted Performance

Solid

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

Pair Trading with Shufersal and Harel Insurance

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

The idea behind Shufersal and Harel Insurance Investments 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.