Correlation Between Delek and Alrov Properties

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

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

Diversification Opportunities for Delek and Alrov Properties

0.81

Correlation Coefficient

Delek  Alrov Properties

Very poor diversification

The 3 months correlation between Delek and Alrov is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Alrov Properties Lodgings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alrov Properties Lodgings and Delek 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 Delek Group are associated (or correlated) with Alrov Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alrov Properties Lodgings has no effect on the direction of Delek i.e., Delek and Alrov Properties go up and down completely randomly.

Pair Corralation between Delek and Alrov Properties

Assuming the 90 days trading horizon Delek Group is expected to generate 1.26 times more return on investment than Alrov Properties. However, Delek is 1.26 times more volatile than Alrov Properties Lodgings. It trades about 0.05 of its potential returns per unit of risk. Alrov Properties Lodgings is currently generating about 0.01 per unit of risk. If you would invest  3,160,411  in Delek Group on September 24, 2024 and sell it today you would earn a total of  1,479,589  from holding Delek Group or generate 46.82% return on investment over 90 days.

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

Delek Group  vs.  Alrov Properties Lodgings

Delek Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Delek unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alrov Properties Lodgings

Risk-Adjusted Performance

41 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Alrov Properties Lodgings are ranked lower than 41 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Alrov Properties unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek and Alrov Properties

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

The idea behind Delek Group and Alrov Properties Lodgings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.