Correlation Between Millennium Food and Clal Industries

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

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

Diversification Opportunities for Millennium Food and Clal Industries

-0.55

Correlation Coefficient

Millennium Food  Clal Industries

Excellent diversification

The 3 months correlation between Millennium and Clal is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Millennium Food Tech LP and Clal Industries and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Industries and Millennium Food 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 Millennium Food Tech LP are associated (or correlated) with Clal Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Industries has no effect on the direction of Millennium Food i.e., Millennium Food and Clal Industries go up and down completely randomly.

Pair Corralation between Millennium Food and Clal Industries

Assuming the 90 days trading horizon Millennium Food Tech LP is expected to under-perform the Clal Industries. In addition to that, Millennium Food is 1.29 times more volatile than Clal Industries and. It trades about -0.04 of its total potential returns per unit of risk. Clal Industries and is currently generating about 0.23 per unit of volatility. If you would invest  177,900  in Clal Industries and on September 12, 2024 and sell it today you would earn a total of  48,300  from holding Clal Industries and or generate 27.15% return on investment over 90 days.

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

Millennium Food Tech LP  vs.  Clal Industries and

Millennium Food Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Millennium Food Tech LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Clal Industries

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Industries and are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clal Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Millennium Food and Clal Industries

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

The idea behind Millennium Food Tech LP and Clal Industries and 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.