Correlation Between Altshuler Shaham and NewMed Energy

Can any of the company-specific risk be diversified away by investing in both Altshuler Shaham and NewMed 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 Altshuler Shaham and NewMed Energy 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 NewMed Energy , you can compare the effects of market volatilities on Altshuler Shaham and NewMed 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 Altshuler Shaham with a short position of NewMed Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altshuler Shaham and NewMed Energy.

Diversification Opportunities for Altshuler Shaham and NewMed Energy

0.94

Correlation Coefficient

Altshuler Shaham  NewMed Energy

Almost no diversification

The 3 months correlation between Altshuler and NewMed is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Altshuler Shaham Financial and NewMed Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewMed Energy 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 NewMed Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewMed Energy has no effect on the direction of Altshuler Shaham i.e., Altshuler Shaham and NewMed Energy go up and down completely randomly.

Pair Corralation between Altshuler Shaham and NewMed Energy

Assuming the 90 days trading horizon Altshuler Shaham Financial is expected to under-perform the NewMed Energy. In addition to that, Altshuler Shaham is 1.33 times more volatile than NewMed Energy . It trades about -0.34 of its total potential returns per unit of risk. NewMed Energy is currently generating about -0.14 per unit of volatility. If you would invest  115,349  in NewMed Energy on September 25, 2024 and sell it today you would lose (3,049) from holding NewMed Energy or give up 2.64% of portfolio value over 90 days.

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

Altshuler Shaham Financial  vs.  NewMed Energy

Altshuler Shaham Fin

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altshuler Shaham Financial are ranked lower than 11 (%) 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.

NewMed Energy

Risk-Adjusted Performance

19 of 100

Solid

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

Pair Trading with Altshuler Shaham and NewMed Energy

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

The idea behind Altshuler Shaham Financial and NewMed 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.