Correlation Between Clal Insurance and Payment Financial

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

By analyzing existing cross correlation between Clal Insurance Enterprises and Payment Financial Technologies, you can compare the effects of market volatilities on Clal Insurance and Payment Financial 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 Clal Insurance with a short position of Payment Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and Payment Financial.

Diversification Opportunities for Clal Insurance and Payment Financial

0.76

Correlation Coefficient

Clal Insurance  Payment Financial

Poor diversification

The 3 months correlation between Clal and Payment is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Payment Financial Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payment Financial and Clal Insurance 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 Clal Insurance Enterprises are associated (or correlated) with Payment Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payment Financial has no effect on the direction of Clal Insurance i.e., Clal Insurance and Payment Financial go up and down completely randomly.

Pair Corralation between Clal Insurance and Payment Financial

Assuming the 90 days trading horizon Clal Insurance Enterprises is expected to generate 0.52 times more return on investment than Payment Financial. However, Clal Insurance Enterprises is 1.91 times less risky than Payment Financial. It trades about 0.46 of its potential returns per unit of risk. Payment Financial Technologies is currently generating about 0.2 per unit of risk. If you would invest  558,417  in Clal Insurance Enterprises on September 21, 2024 and sell it today you would earn a total of  291,883  from holding Clal Insurance Enterprises or generate 52.27% return on investment over 90 days.

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

Clal Insurance Enterprises  vs.  Payment Financial Technologies

Clal Insurance Enter

Risk-Adjusted Performance

36 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Insurance Enterprises are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clal Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Payment Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Payment Financial Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Payment Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clal Insurance and Payment Financial

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

The idea behind Clal Insurance Enterprises and Payment Financial Technologies 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.