Correlation Between Shufersal and Tiv Taam

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

By analyzing existing cross correlation between Shufersal and Tiv Taam, you can compare the effects of market volatilities on Shufersal and Tiv Taam 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 Tiv Taam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shufersal and Tiv Taam.

Diversification Opportunities for Shufersal and Tiv Taam

-0.16

Correlation Coefficient

Shufersal  Tiv Taam

Good diversification

The 3 months correlation between Shufersal and Tiv is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Shufersal and Tiv Taam in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiv Taam 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 Tiv Taam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiv Taam has no effect on the direction of Shufersal i.e., Shufersal and Tiv Taam go up and down completely randomly.

Pair Corralation between Shufersal and Tiv Taam

Assuming the 90 days trading horizon Shufersal is expected to under-perform the Tiv Taam. But the stock apears to be less risky and, when comparing its historical volatility, Shufersal is 1.34 times less risky than Tiv Taam. The stock trades about -0.06 of its potential returns per unit of risk. The Tiv Taam is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  63,140  in Tiv Taam on December 30, 2024 and sell it today you would earn a total of  8,290  from holding Tiv Taam or generate 13.13% return on investment over 90 days.

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

Shufersal  vs.  Tiv Taam

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.

Tiv Taam

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tiv Taam are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tiv Taam sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shufersal and Tiv Taam

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

The idea behind Shufersal and Tiv Taam 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.