Correlation Between EN Shoham and Rani Zim

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

By analyzing existing cross correlation between EN Shoham Business and Rani Zim Shopping, you can compare the effects of market volatilities on EN Shoham and Rani Zim 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 EN Shoham with a short position of Rani Zim. Check out your portfolio center. Please also check ongoing floating volatility patterns of EN Shoham and Rani Zim.

Diversification Opportunities for EN Shoham and Rani Zim

0.92

Correlation Coefficient

EN Shoham  Rani Zim

Almost no diversification

The 3 months correlation between SHOM and Rani is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding EN Shoham Business and Rani Zim Shopping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rani Zim Shopping and EN Shoham 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 EN Shoham Business are associated (or correlated) with Rani Zim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rani Zim Shopping has no effect on the direction of EN Shoham i.e., EN Shoham and Rani Zim go up and down completely randomly.

Pair Corralation between EN Shoham and Rani Zim

Assuming the 90 days trading horizon EN Shoham Business is expected to under-perform the Rani Zim. But the stock apears to be less risky and, when comparing its historical volatility, EN Shoham Business is 1.62 times less risky than Rani Zim. The stock trades about -0.02 of its potential returns per unit of risk. The Rani Zim Shopping is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  45,770  in Rani Zim Shopping on November 29, 2024 and sell it today you would earn a total of  1,020  from holding Rani Zim Shopping or generate 2.23% return on investment over 90 days.

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

EN Shoham Business  vs.  Rani Zim Shopping

EN Shoham Business

Risk-Adjusted Performance

Solid

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

Rani Zim Shopping

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rani Zim Shopping are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rani Zim sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EN Shoham and Rani Zim

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

The idea behind EN Shoham Business and Rani Zim Shopping 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.