Correlation Between Energy Basic and Issachar Fund

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

By analyzing existing cross correlation between Energy Basic Materials and Issachar Fund Class, you can compare the effects of market volatilities on Energy Basic and Issachar Fund 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 Energy Basic with a short position of Issachar Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Basic and Issachar Fund.

Diversification Opportunities for Energy Basic and Issachar Fund

0.06

Correlation Coefficient

Energy Basic  Issachar Fund

Significant diversification

The 3 months correlation between Energy and Issachar is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Energy Basic Materials and Issachar Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Issachar Fund Class and Energy Basic 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 Energy Basic Materials are associated (or correlated) with Issachar Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Issachar Fund Class has no effect on the direction of Energy Basic i.e., Energy Basic and Issachar Fund go up and down completely randomly.

Pair Corralation between Energy Basic and Issachar Fund

Assuming the 90 days horizon Energy Basic Materials is expected to generate 0.6 times more return on investment than Issachar Fund. However, Energy Basic Materials is 1.66 times less risky than Issachar Fund. It trades about 0.1 of its potential returns per unit of risk. Issachar Fund Class is currently generating about -0.05 per unit of risk. If you would invest  926.00  in Energy Basic Materials on December 29, 2024 and sell it today you would earn a total of  53.00  from holding Energy Basic Materials or generate 5.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Energy Basic Materials  vs.  Issachar Fund Class

Energy Basic Materials

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Basic Materials are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Energy Basic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Issachar Fund Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Issachar Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Issachar Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Energy Basic and Issachar Fund

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

The idea behind Energy Basic Materials and Issachar Fund Class 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.