Correlation Between Harel Insurance and Aura Investments

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

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

Diversification Opportunities for Harel Insurance and Aura Investments

0.9

Correlation Coefficient

Harel Insurance  Aura Investments

Almost no diversification

The 3 months correlation between Harel and Aura is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Harel Insurance Investments and Aura Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Investments and Harel 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 Harel Insurance Investments are associated (or correlated) with Aura Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Investments has no effect on the direction of Harel Insurance i.e., Harel Insurance and Aura Investments go up and down completely randomly.

Pair Corralation between Harel Insurance and Aura Investments

Assuming the 90 days trading horizon Harel Insurance Investments is expected to generate 1.09 times more return on investment than Aura Investments. However, Harel Insurance is 1.09 times more volatile than Aura Investments. It trades about 0.62 of its potential returns per unit of risk. Aura Investments is currently generating about 0.12 per unit of risk. If you would invest  420,000  in Harel Insurance Investments on September 17, 2024 and sell it today you would earn a total of  87,200  from holding Harel Insurance Investments or generate 20.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	94.44%
Values	Daily Returns

Harel Insurance Investments  vs.  Aura Investments

Harel Insurance Inve

Risk-Adjusted Performance

41 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Harel Insurance Investments are ranked lower than 41 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harel Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Aura Investments

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aura Investments are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aura Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harel Insurance and Aura Investments

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

The idea behind Harel Insurance Investments and Aura Investments 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 Stocks Directory module to find actively traded stocks across global markets.