Correlation Between Isras Investment and Shemen Industries

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

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

Diversification Opportunities for Isras Investment and Shemen Industries

0.78

Correlation Coefficient

Isras Investment  Shemen Industries

Poor diversification

The 3 months correlation between Isras and Shemen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Isras Investment and Shemen Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shemen Industries and Isras Investment 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 Isras Investment are associated (or correlated) with Shemen Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shemen Industries has no effect on the direction of Isras Investment i.e., Isras Investment and Shemen Industries go up and down completely randomly.

Pair Corralation between Isras Investment and Shemen Industries

Assuming the 90 days trading horizon Isras Investment is expected to generate 1.98 times less return on investment than Shemen Industries. But when comparing it to its historical volatility, Isras Investment is 1.48 times less risky than Shemen Industries. It trades about 0.19 of its potential returns per unit of risk. Shemen Industries is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  131,400  in Shemen Industries on September 29, 2024 and sell it today you would earn a total of  47,900  from holding Shemen Industries or generate 36.45% return on investment over 90 days.

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

Isras Investment  vs.  Shemen Industries

Isras Investment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Isras Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Isras Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Shemen Industries

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shemen Industries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Shemen Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Isras Investment and Shemen Industries

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

The idea behind Isras Investment and Shemen Industries 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.