Correlation Between Altshuler Shaham and Sofwave Medical

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

Diversification Opportunities for Altshuler Shaham and Sofwave Medical

0.3

Correlation Coefficient

Altshuler Shaham  Sofwave Medical

Weak diversification

The 3 months correlation between Altshuler and Sofwave is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Altshuler Shaham Financial and Sofwave Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sofwave Medical 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 Sofwave Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sofwave Medical has no effect on the direction of Altshuler Shaham i.e., Altshuler Shaham and Sofwave Medical go up and down completely randomly.

Pair Corralation between Altshuler Shaham and Sofwave Medical

Assuming the 90 days trading horizon Altshuler Shaham Financial is expected to generate 0.72 times more return on investment than Sofwave Medical. However, Altshuler Shaham Financial is 1.38 times less risky than Sofwave Medical. It trades about 0.24 of its potential returns per unit of risk. Sofwave Medical is currently generating about 0.0 per unit of risk. If you would invest  49,351  in Altshuler Shaham Financial on September 17, 2024 and sell it today you would earn a total of  13,239  from holding Altshuler Shaham Financial or generate 26.83% return on investment over 90 days.

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

Altshuler Shaham Financial  vs.  Sofwave Medical

Altshuler Shaham Fin

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altshuler Shaham Financial are ranked lower than 18 (%) 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.

Sofwave Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofwave Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sofwave Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Altshuler Shaham and Sofwave Medical

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

The idea behind Altshuler Shaham Financial and Sofwave Medical 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .