Correlation Between B Yair and Shemen Industries

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

By analyzing existing cross correlation between B Yair Building and Shemen Industries, you can compare the effects of market volatilities on B Yair and Shemen Industries 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 B Yair with a short position of Shemen Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Yair and Shemen Industries.

Diversification Opportunities for B Yair and Shemen Industries

0.63

Correlation Coefficient

B Yair  Shemen Industries

Poor diversification

The 3 months correlation between BYAR and Shemen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding B Yair Building and Shemen Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shemen Industries and B Yair 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 B Yair Building are associated (or correlated) with Shemen Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shemen Industries has no effect on the direction of B Yair i.e., B Yair and Shemen Industries go up and down completely randomly.

Pair Corralation between B Yair and Shemen Industries

Assuming the 90 days trading horizon B Yair Building is expected to generate 1.92 times more return on investment than Shemen Industries. However, B Yair is 1.92 times more volatile than Shemen Industries. It trades about 0.05 of its potential returns per unit of risk. Shemen Industries is currently generating about 0.02 per unit of risk. If you would invest  104,500  in B Yair Building on September 29, 2024 and sell it today you would earn a total of  53,000  from holding B Yair Building or generate 50.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.74%
Values	Daily Returns

B Yair Building  vs.  Shemen Industries

B Yair Building

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in B Yair Building are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, B Yair sustained solid returns over the last few months and may actually be approaching a breakup point.

Shemen Industries

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shemen Industries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Shemen Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with B Yair and Shemen Industries

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

The idea behind B Yair Building and Shemen Industries 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.