Correlation Between Delek and Tamar Petroleum

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

By analyzing existing cross correlation between Delek Group and Tamar Petroleum, you can compare the effects of market volatilities on Delek and Tamar Petroleum 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 Tamar Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek and Tamar Petroleum.

Diversification Opportunities for Delek and Tamar Petroleum

0.96

Correlation Coefficient

Delek  Tamar Petroleum

Almost no diversification

The 3 months correlation between Delek and Tamar is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Tamar Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamar Petroleum 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 Tamar Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamar Petroleum has no effect on the direction of Delek i.e., Delek and Tamar Petroleum go up and down completely randomly.

Pair Corralation between Delek and Tamar Petroleum

Assuming the 90 days trading horizon Delek Group is expected to under-perform the Tamar Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Delek Group is 3.04 times less risky than Tamar Petroleum. The stock trades about -0.18 of its potential returns per unit of risk. The Tamar Petroleum is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  233,700  in Tamar Petroleum on September 24, 2024 and sell it today you would lose (1,100) from holding Tamar Petroleum or give up 0.47% of portfolio value over 90 days.

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

Delek Group  vs.  Tamar Petroleum

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.

Tamar Petroleum

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tamar Petroleum are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Tamar Petroleum sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek and Tamar Petroleum

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

The idea behind Delek Group and Tamar Petroleum 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.