Correlation Between Azrieli and Mega Or

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

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

Diversification Opportunities for Azrieli and Mega Or

0.9

Correlation Coefficient

Azrieli  Mega Or

Almost no diversification

The 3 months correlation between Azrieli and Mega is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Azrieli Group and Mega Or in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega Or and Azrieli 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 Azrieli Group are associated (or correlated) with Mega Or. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega Or has no effect on the direction of Azrieli i.e., Azrieli and Mega Or go up and down completely randomly.

Pair Corralation between Azrieli and Mega Or

Assuming the 90 days trading horizon Azrieli Group is expected to generate 0.92 times more return on investment than Mega Or. However, Azrieli Group is 1.09 times less risky than Mega Or. It trades about 0.12 of its potential returns per unit of risk. Mega Or is currently generating about -0.05 per unit of risk. If you would invest  2,899,000  in Azrieli Group on September 30, 2024 and sell it today you would earn a total of  75,000  from holding Azrieli Group or generate 2.59% return on investment over 90 days.

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

Azrieli Group  vs.  Mega Or

Azrieli Group

Risk-Adjusted Performance

13 of 100

Good

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

Mega Or

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mega Or are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mega Or sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Azrieli and Mega Or

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

The idea behind Azrieli Group and Mega Or 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.