Correlation Between Alony Hetz and Sarfati

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

Diversification Opportunities for Alony Hetz and Sarfati

0.8

Correlation Coefficient

Alony Hetz  Sarfati

Very poor diversification

The 3 months correlation between Alony and Sarfati is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Alony Hetz Properties and Sarfati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarfati 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 Sarfati. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarfati has no effect on the direction of Alony Hetz i.e., Alony Hetz and Sarfati go up and down completely randomly.

Pair Corralation between Alony Hetz and Sarfati

Assuming the 90 days trading horizon Alony Hetz Properties is expected to under-perform the Sarfati. In addition to that, Alony Hetz is 1.01 times more volatile than Sarfati. It trades about -0.1 of its total potential returns per unit of risk. Sarfati is currently generating about 0.14 per unit of volatility. If you would invest  402,000  in Sarfati on September 28, 2024 and sell it today you would earn a total of  17,300  from holding Sarfati or generate 4.3% return on investment over 90 days.

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

Alony Hetz Properties  vs.  Sarfati

Alony Hetz Properties

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alony Hetz Properties are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alony Hetz may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sarfati

Risk-Adjusted Performance

19 of 100

Solid

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

Pair Trading with Alony Hetz and Sarfati

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

The idea behind Alony Hetz Properties and Sarfati 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.