Correlation Between Rami Levi and Klil Industries

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

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

Diversification Opportunities for Rami Levi and Klil Industries

0.9

Correlation Coefficient

Rami Levi  Klil Industries

Almost no diversification

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

Pair Corralation between Rami Levi and Klil Industries

Assuming the 90 days trading horizon Rami Levi is expected to generate 1.57 times less return on investment than Klil Industries. But when comparing it to its historical volatility, Rami Levi is 2.42 times less risky than Klil Industries. It trades about 0.32 of its potential returns per unit of risk. Klil Industries is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,970,000  in Klil Industries on September 27, 2024 and sell it today you would earn a total of  642,000  from holding Klil Industries or generate 32.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.83%
Values	Daily Returns

Rami Levi  vs.  Klil Industries

Rami Levi

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rami Levi are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rami Levi sustained solid returns over the last few months and may actually be approaching a breakup point.

Klil Industries

Risk-Adjusted Performance

16 of 100

Solid

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

Pair Trading with Rami Levi and Klil Industries

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

The idea behind Rami Levi and Klil Industries 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.