Correlation Between EN Shoham and Tedea Technological

Can any of the company-specific risk be diversified away by investing in both EN Shoham and Tedea Technological 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 Tedea Technological 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 Tedea Technological Development, you can compare the effects of market volatilities on EN Shoham and Tedea Technological 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 Tedea Technological. Check out your portfolio center. Please also check ongoing floating volatility patterns of EN Shoham and Tedea Technological.

Diversification Opportunities for EN Shoham and Tedea Technological

-0.55

Correlation Coefficient

EN Shoham  Tedea Technological

Excellent diversification

The 3 months correlation between SHOM and Tedea is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding EN Shoham Business and Tedea Technological Developmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tedea Technological 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 Tedea Technological. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tedea Technological has no effect on the direction of EN Shoham i.e., EN Shoham and Tedea Technological go up and down completely randomly.

Pair Corralation between EN Shoham and Tedea Technological

Assuming the 90 days trading horizon EN Shoham Business is expected to generate 0.78 times more return on investment than Tedea Technological. However, EN Shoham Business is 1.28 times less risky than Tedea Technological. It trades about 0.51 of its potential returns per unit of risk. Tedea Technological Development is currently generating about 0.01 per unit of risk. If you would invest  58,360  in EN Shoham Business on September 4, 2024 and sell it today you would earn a total of  11,240  from holding EN Shoham Business or generate 19.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

EN Shoham Business  vs.  Tedea Technological Developmen

EN Shoham Business

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in EN Shoham Business are ranked lower than 29 (%) 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.

Tedea Technological

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tedea Technological Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with EN Shoham and Tedea Technological

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

The idea behind EN Shoham Business and Tedea Technological Development 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.