Correlation Between Alony Hetz and OPC Energy

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

By analyzing existing cross correlation between Alony Hetz Properties and OPC Energy, you can compare the effects of market volatilities on Alony Hetz and OPC Energy 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 Alony Hetz with a short position of OPC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alony Hetz and OPC Energy.

Diversification Opportunities for Alony Hetz and OPC Energy

0.72

Correlation Coefficient

Alony Hetz  OPC Energy

Poor diversification

The 3 months correlation between Alony and OPC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Alony Hetz Properties and OPC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPC Energy and Alony Hetz 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 Alony Hetz Properties are associated (or correlated) with OPC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPC Energy has no effect on the direction of Alony Hetz i.e., Alony Hetz and OPC Energy go up and down completely randomly.

Pair Corralation between Alony Hetz and OPC Energy

Assuming the 90 days trading horizon Alony Hetz Properties is expected to generate 0.92 times more return on investment than OPC Energy. However, Alony Hetz Properties is 1.09 times less risky than OPC Energy. It trades about 0.14 of its potential returns per unit of risk. OPC Energy is currently generating about -0.03 per unit of risk. If you would invest  290,221  in Alony Hetz Properties on September 17, 2024 and sell it today you would earn a total of  15,079  from holding Alony Hetz Properties or generate 5.2% return on investment over 90 days.

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

Alony Hetz Properties  vs.  OPC Energy

Alony Hetz Properties

Risk-Adjusted Performance

10 of 100

OK

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

OPC Energy

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OPC Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, OPC Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Alony Hetz and OPC Energy

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

The idea behind Alony Hetz Properties and OPC Energy 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.