Correlation Between Bank Leumi and Overseas Chinese

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

By analyzing existing cross correlation between Bank Leumi Le and Overseas Chinese Banking, you can compare the effects of market volatilities on Bank Leumi and Overseas Chinese 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 Bank Leumi with a short position of Overseas Chinese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Leumi and Overseas Chinese.

Diversification Opportunities for Bank Leumi and Overseas Chinese

0.45

Correlation Coefficient

Bank Leumi  Overseas Chinese

Very weak diversification

The 3 months correlation between Bank and Overseas is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bank Leumi Le and Overseas Chinese Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overseas Chinese Banking and Bank Leumi 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 Bank Leumi Le are associated (or correlated) with Overseas Chinese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overseas Chinese Banking has no effect on the direction of Bank Leumi i.e., Bank Leumi and Overseas Chinese go up and down completely randomly.

Pair Corralation between Bank Leumi and Overseas Chinese

If you would invest  2,236  in Overseas Chinese Banking on September 4, 2024 and sell it today you would earn a total of  163.00  from holding Overseas Chinese Banking or generate 7.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Bank Leumi Le   vs.  Overseas Chinese Banking

Bank Leumi Le

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Leumi Le has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Bank Leumi is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Overseas Chinese Banking

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Overseas Chinese Banking are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, Overseas Chinese may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bank Leumi and Overseas Chinese

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

The idea behind Bank Leumi Le and Overseas Chinese Banking 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.