Correlation Between Carmit and Poalim Ibi

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

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

Diversification Opportunities for Carmit and Poalim Ibi

0.33

Correlation Coefficient

Carmit  Poalim Ibi

Weak diversification

The 3 months correlation between Carmit and Poalim is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Carmit and Poalim Ibi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poalim Ibi and Carmit 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 Carmit are associated (or correlated) with Poalim Ibi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poalim Ibi has no effect on the direction of Carmit i.e., Carmit and Poalim Ibi go up and down completely randomly.

Pair Corralation between Carmit and Poalim Ibi

Assuming the 90 days trading horizon Carmit is expected to generate 1.26 times more return on investment than Poalim Ibi. However, Carmit is 1.26 times more volatile than Poalim Ibi. It trades about 0.13 of its potential returns per unit of risk. Poalim Ibi is currently generating about 0.13 per unit of risk. If you would invest  86,220  in Carmit on September 29, 2024 and sell it today you would earn a total of  31,680  from holding Carmit or generate 36.74% return on investment over 90 days.

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

Carmit  vs.  Poalim Ibi

Carmit

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carmit are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Carmit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Poalim Ibi

Risk-Adjusted Performance

20 of 100

Solid

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

Pair Trading with Carmit and Poalim Ibi

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

The idea behind Carmit and Poalim Ibi 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.