Correlation Between Oron Group and Shapir Engineering

Can any of the company-specific risk be diversified away by investing in both Oron Group and Shapir Engineering 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 Oron Group and Shapir Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oron Group Investments and Shapir Engineering Industry, you can compare the effects of market volatilities on Oron Group and Shapir Engineering 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 Oron Group with a short position of Shapir Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oron Group and Shapir Engineering.

Diversification Opportunities for Oron Group and Shapir Engineering

0.9

Correlation Coefficient

Oron Group  Shapir Engineering

Almost no diversification

The 3 months correlation between Oron and Shapir is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Oron Group Investments and Shapir Engineering Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shapir Engineering and Oron Group 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 Oron Group Investments are associated (or correlated) with Shapir Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shapir Engineering has no effect on the direction of Oron Group i.e., Oron Group and Shapir Engineering go up and down completely randomly.

Pair Corralation between Oron Group and Shapir Engineering

Assuming the 90 days trading horizon Oron Group is expected to generate 1.3 times less return on investment than Shapir Engineering. But when comparing it to its historical volatility, Oron Group Investments is 1.16 times less risky than Shapir Engineering. It trades about 0.22 of its potential returns per unit of risk. Shapir Engineering Industry is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  214,000  in Shapir Engineering Industry on September 28, 2024 and sell it today you would earn a total of  62,800  from holding Shapir Engineering Industry or generate 29.35% return on investment over 90 days.

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

Oron Group Investments  vs.  Shapir Engineering Industry

Oron Group Investments

Risk-Adjusted Performance

17 of 100

Solid

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

Shapir Engineering

Risk-Adjusted Performance

19 of 100

Solid

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

Pair Trading with Oron Group and Shapir Engineering

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

The idea behind Oron Group Investments and Shapir Engineering Industry 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.