Correlation Between Ituran Location and PC Tel

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

By analyzing existing cross correlation between Ituran Location and and PC Tel Inc, you can compare the effects of market volatilities on Ituran Location and PC Tel 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 Ituran Location with a short position of PC Tel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ituran Location and PC Tel.

Diversification Opportunities for Ituran Location and PC Tel

0.54

Correlation Coefficient

Ituran Location  PC Tel

Very weak diversification

The 3 months correlation between Ituran and PCTI is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ituran Location and and PC Tel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PC Tel Inc and Ituran Location 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 Ituran Location and are associated (or correlated) with PC Tel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PC Tel Inc has no effect on the direction of Ituran Location i.e., Ituran Location and PC Tel go up and down completely randomly.

Pair Corralation between Ituran Location and PC Tel

If you would invest  2,610  in Ituran Location and on September 21, 2024 and sell it today you would earn a total of  388.00  from holding Ituran Location and or generate 14.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.93%
Values	Daily Returns

Ituran Location and  vs.  PC Tel Inc

Ituran Location

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ituran Location and are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Ituran Location displayed solid returns over the last few months and may actually be approaching a breakup point.

PC Tel Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PC Tel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, PC Tel is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ituran Location and PC Tel

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

The idea behind Ituran Location and and PC Tel Inc 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.