Correlation Between Tadiran Hldg and Electra Co

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

By analyzing existing cross correlation between Tadiran Hldg and Electra Co Pr, you can compare the effects of market volatilities on Tadiran Hldg and Electra Co 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 Tadiran Hldg with a short position of Electra Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tadiran Hldg and Electra Co.

Diversification Opportunities for Tadiran Hldg and Electra Co

0.24

Correlation Coefficient

Tadiran Hldg  Electra Co

Modest diversification

The 3 months correlation between Tadiran and Electra is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Tadiran Hldg and Electra Co Pr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra Co Pr and Tadiran Hldg 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 Tadiran Hldg are associated (or correlated) with Electra Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra Co Pr has no effect on the direction of Tadiran Hldg i.e., Tadiran Hldg and Electra Co go up and down completely randomly.

Pair Corralation between Tadiran Hldg and Electra Co

Assuming the 90 days trading horizon Tadiran Hldg is expected to generate 1.08 times less return on investment than Electra Co. In addition to that, Tadiran Hldg is 1.58 times more volatile than Electra Co Pr. It trades about 0.16 of its total potential returns per unit of risk. Electra Co Pr is currently generating about 0.27 per unit of volatility. If you would invest  924,400  in Electra Co Pr on November 28, 2024 and sell it today you would earn a total of  275,600  from holding Electra Co Pr or generate 29.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.04%
Values	Daily Returns

Tadiran Hldg  vs.  Electra Co Pr

Tadiran Hldg

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tadiran Hldg are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tadiran Hldg sustained solid returns over the last few months and may actually be approaching a breakup point.

Electra Co Pr

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electra Co Pr are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Electra Co sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tadiran Hldg and Electra Co

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

The idea behind Tadiran Hldg and Electra Co Pr 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.