Correlation Between Kardan Real and Israel Discount

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Can any of the company-specific risk be diversified away by investing in both Kardan Real and Israel Discount 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 Kardan Real and Israel Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kardan Real Estate and Israel Discount Bank, you can compare the effects of market volatilities on Kardan Real and Israel Discount 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 Kardan Real with a short position of Israel Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kardan Real and Israel Discount.

Diversification Opportunities for Kardan Real and Israel Discount

0.94
  Correlation Coefficient

Almost no diversification

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

Pair Corralation between Kardan Real and Israel Discount

Assuming the 90 days trading horizon Kardan Real is expected to generate 1.05 times less return on investment than Israel Discount. In addition to that, Kardan Real is 1.31 times more volatile than Israel Discount Bank. It trades about 0.18 of its total potential returns per unit of risk. Israel Discount Bank is currently generating about 0.25 per unit of volatility. If you would invest  203,680  in Israel Discount Bank on September 26, 2024 and sell it today you would earn a total of  41,620  from holding Israel Discount Bank or generate 20.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Kardan Real Estate  vs.  Israel Discount Bank

 Performance 
       Timeline  
Kardan Real Estate 

Risk-Adjusted Performance

14 of 100

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

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Israel Discount Bank are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Israel Discount sustained solid returns over the last few months and may actually be approaching a breakup point.

Kardan Real and Israel Discount Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kardan Real and Israel Discount

The main advantage of trading using opposite Kardan Real and Israel Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kardan Real position performs unexpectedly, Israel Discount 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 Israel Discount will offset losses from the drop in Israel Discount's long position.
The idea behind Kardan Real Estate and Israel Discount Bank 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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