Correlation Between Altshuler Shaham and Kadimastem

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

By analyzing existing cross correlation between Altshuler Shaham Financial and Kadimastem, you can compare the effects of market volatilities on Altshuler Shaham and Kadimastem 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 Altshuler Shaham with a short position of Kadimastem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altshuler Shaham and Kadimastem.

Diversification Opportunities for Altshuler Shaham and Kadimastem

0.88

Correlation Coefficient

Altshuler Shaham  Kadimastem

Very poor diversification

The 3 months correlation between Altshuler and Kadimastem is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Altshuler Shaham Financial and Kadimastem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kadimastem and Altshuler Shaham 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 Altshuler Shaham Financial are associated (or correlated) with Kadimastem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kadimastem has no effect on the direction of Altshuler Shaham i.e., Altshuler Shaham and Kadimastem go up and down completely randomly.

Pair Corralation between Altshuler Shaham and Kadimastem

Assuming the 90 days trading horizon Altshuler Shaham is expected to generate 4.01 times less return on investment than Kadimastem. But when comparing it to its historical volatility, Altshuler Shaham Financial is 3.92 times less risky than Kadimastem. It trades about 0.17 of its potential returns per unit of risk. Kadimastem is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  68,000  in Kadimastem on September 23, 2024 and sell it today you would earn a total of  50,900  from holding Kadimastem or generate 74.85% return on investment over 90 days.

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

Altshuler Shaham Financial  vs.  Kadimastem

Altshuler Shaham Fin

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altshuler Shaham Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Altshuler Shaham sustained solid returns over the last few months and may actually be approaching a breakup point.

Kadimastem

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kadimastem are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kadimastem sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altshuler Shaham and Kadimastem

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

The idea behind Altshuler Shaham Financial and Kadimastem 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.