Correlation Between KSM Mutual and Harel Index

Can any of the company-specific risk be diversified away by investing in both KSM Mutual and Harel Index 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 KSM Mutual and Harel Index into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KSM Mutual Funds and Harel Index Funds, you can compare the effects of market volatilities on KSM Mutual and Harel Index 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 KSM Mutual with a short position of Harel Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of KSM Mutual and Harel Index.

Diversification Opportunities for KSM Mutual and Harel Index

0.97

Correlation Coefficient

KSM Mutual  Harel Index

Almost no diversification

The 3 months correlation between KSM and Harel is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding KSM Mutual Funds and Harel Index Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harel Index Funds and KSM Mutual 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 KSM Mutual Funds are associated (or correlated) with Harel Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harel Index Funds has no effect on the direction of KSM Mutual i.e., KSM Mutual and Harel Index go up and down completely randomly.

Pair Corralation between KSM Mutual and Harel Index

Assuming the 90 days trading horizon KSM Mutual Funds is expected to generate 2.49 times more return on investment than Harel Index. However, KSM Mutual is 2.49 times more volatile than Harel Index Funds. It trades about 0.17 of its potential returns per unit of risk. Harel Index Funds is currently generating about 0.12 per unit of risk. If you would invest  5,236,000  in KSM Mutual Funds on September 16, 2024 and sell it today you would earn a total of  819,000  from holding KSM Mutual Funds or generate 15.64% return on investment over 90 days.

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

KSM Mutual Funds  vs.  Harel Index Funds

KSM Mutual Funds

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KSM Mutual Funds are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, KSM Mutual sustained solid returns over the last few months and may actually be approaching a breakup point.

Harel Index Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harel Index Funds are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Harel Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KSM Mutual and Harel Index

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

The idea behind KSM Mutual Funds and Harel Index Funds 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.