Correlation Between Rimon Consulting and Abra Information

Can any of the company-specific risk be diversified away by investing in both Rimon Consulting and Abra Information 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 Rimon Consulting and Abra Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rimon Consulting Management and Abra Information Technologies, you can compare the effects of market volatilities on Rimon Consulting and Abra Information 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 Rimon Consulting with a short position of Abra Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rimon Consulting and Abra Information.

Diversification Opportunities for Rimon Consulting and Abra Information

0.46

Correlation Coefficient

Rimon Consulting  Abra Information

Very weak diversification

The 3 months correlation between Rimon and Abra is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Rimon Consulting Management and Abra Information Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abra Information Tec and Rimon Consulting 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 Rimon Consulting Management are associated (or correlated) with Abra Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abra Information Tec has no effect on the direction of Rimon Consulting i.e., Rimon Consulting and Abra Information go up and down completely randomly.

Pair Corralation between Rimon Consulting and Abra Information

Assuming the 90 days trading horizon Rimon Consulting Management is expected to generate 1.28 times more return on investment than Abra Information. However, Rimon Consulting is 1.28 times more volatile than Abra Information Technologies. It trades about 0.16 of its potential returns per unit of risk. Abra Information Technologies is currently generating about 0.09 per unit of risk. If you would invest  292,200  in Rimon Consulting Management on September 29, 2024 and sell it today you would earn a total of  132,800  from holding Rimon Consulting Management or generate 45.45% return on investment over 90 days.

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

Rimon Consulting Management  vs.  Abra Information Technologies

Rimon Consulting Man

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rimon Consulting Management are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rimon Consulting sustained solid returns over the last few months and may actually be approaching a breakup point.

Abra Information Tec

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abra Information Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Abra Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rimon Consulting and Abra Information

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

The idea behind Rimon Consulting Management and Abra Information Technologies 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.