Correlation Between ICL Israel and One Software

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

By analyzing existing cross correlation between ICL Israel Chemicals and One Software Technologies, you can compare the effects of market volatilities on ICL Israel and One Software 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 ICL Israel with a short position of One Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and One Software.

Diversification Opportunities for ICL Israel and One Software

0.83

Correlation Coefficient

ICL Israel  One Software

Very poor diversification

The 3 months correlation between ICL and One is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and One Software Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Software Technologies and ICL Israel 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 ICL Israel Chemicals are associated (or correlated) with One Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Software Technologies has no effect on the direction of ICL Israel i.e., ICL Israel and One Software go up and down completely randomly.

Pair Corralation between ICL Israel and One Software

Assuming the 90 days trading horizon ICL Israel is expected to generate 1.41 times less return on investment than One Software. In addition to that, ICL Israel is 1.17 times more volatile than One Software Technologies. It trades about 0.18 of its total potential returns per unit of risk. One Software Technologies is currently generating about 0.3 per unit of volatility. If you would invest  479,480  in One Software Technologies on September 16, 2024 and sell it today you would earn a total of  173,220  from holding One Software Technologies or generate 36.13% return on investment over 90 days.

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

ICL Israel Chemicals  vs.  One Software Technologies

ICL Israel Chemicals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ICL Israel Chemicals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, ICL Israel sustained solid returns over the last few months and may actually be approaching a breakup point.

One Software Technologies

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in One Software Technologies are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, One Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICL Israel and One Software

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

The idea behind ICL Israel Chemicals and One Software Technologies 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.