Correlation Between Harel Insurance and Seach Medical

Can any of the company-specific risk be diversified away by investing in both Harel Insurance and Seach Medical 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 Seach Medical 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 Seach Medical Group, you can compare the effects of market volatilities on Harel Insurance and Seach Medical 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 Seach Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harel Insurance and Seach Medical.

Diversification Opportunities for Harel Insurance and Seach Medical

0.94

Correlation Coefficient

Harel Insurance  Seach Medical

Almost no diversification

The 3 months correlation between Harel and Seach is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Harel Insurance Investments and Seach Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seach Medical Group 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 Seach Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seach Medical Group has no effect on the direction of Harel Insurance i.e., Harel Insurance and Seach Medical go up and down completely randomly.

Pair Corralation between Harel Insurance and Seach Medical

Assuming the 90 days trading horizon Harel Insurance Investments is expected to generate 1.14 times more return on investment than Seach Medical. However, Harel Insurance is 1.14 times more volatile than Seach Medical Group. It trades about 0.41 of its potential returns per unit of risk. Seach Medical Group is currently generating about 0.23 per unit of risk. If you would invest  429,500  in Harel Insurance Investments on September 28, 2024 and sell it today you would earn a total of  72,500  from holding Harel Insurance Investments or generate 16.88% return on investment over 90 days.

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

Harel Insurance Investments  vs.  Seach Medical Group

Harel Insurance Inve

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Harel Insurance Investments are ranked lower than 29 (%) 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.

Seach Medical Group

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Seach Medical Group are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Seach Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harel Insurance and Seach Medical

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

The idea behind Harel Insurance Investments and Seach Medical Group 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.