Correlation Between Itay Financial and Rimon Consulting

Can any of the company-specific risk be diversified away by investing in both Itay Financial and Rimon Consulting 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 Itay Financial and Rimon Consulting into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Itay Financial AA and Rimon Consulting Management, you can compare the effects of market volatilities on Itay Financial and Rimon Consulting 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 Itay Financial with a short position of Rimon Consulting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itay Financial and Rimon Consulting.

Diversification Opportunities for Itay Financial and Rimon Consulting

0.85

Correlation Coefficient

Itay Financial  Rimon Consulting

Very poor diversification

The 3 months correlation between Itay and Rimon is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Itay Financial AA and Rimon Consulting Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimon Consulting Man and Itay Financial 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 Itay Financial AA are associated (or correlated) with Rimon Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimon Consulting Man has no effect on the direction of Itay Financial i.e., Itay Financial and Rimon Consulting go up and down completely randomly.

Pair Corralation between Itay Financial and Rimon Consulting

Assuming the 90 days trading horizon Itay Financial AA is expected to generate 26.21 times more return on investment than Rimon Consulting. However, Itay Financial is 26.21 times more volatile than Rimon Consulting Management. It trades about 0.07 of its potential returns per unit of risk. Rimon Consulting Management is currently generating about 0.09 per unit of risk. If you would invest  1,760  in Itay Financial AA on September 15, 2024 and sell it today you would earn a total of  37,230  from holding Itay Financial AA or generate 2115.34% return on investment over 90 days.

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

Itay Financial AA  vs.  Rimon Consulting Management

Itay Financial AA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Itay Financial AA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Itay Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Rimon Consulting Man

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rimon Consulting Management are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rimon Consulting sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Itay Financial and Rimon Consulting

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

The idea behind Itay Financial AA and Rimon Consulting Management 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.