Correlation Between Rotshtein and Al Bad

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

By analyzing existing cross correlation between Rotshtein and Al Bad Massuot Yitzhak, you can compare the effects of market volatilities on Rotshtein and Al Bad 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 Rotshtein with a short position of Al Bad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rotshtein and Al Bad.

Diversification Opportunities for Rotshtein and Al Bad

0.91

Correlation Coefficient

Rotshtein  Al Bad

Almost no diversification

The 3 months correlation between Rotshtein and ALBA is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Rotshtein and Al Bad Massuot Yitzhak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Bad Massuot and Rotshtein 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 Rotshtein are associated (or correlated) with Al Bad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Bad Massuot has no effect on the direction of Rotshtein i.e., Rotshtein and Al Bad go up and down completely randomly.

Pair Corralation between Rotshtein and Al Bad

Assuming the 90 days trading horizon Rotshtein is expected to generate 0.86 times more return on investment than Al Bad. However, Rotshtein is 1.16 times less risky than Al Bad. It trades about 0.29 of its potential returns per unit of risk. Al Bad Massuot Yitzhak is currently generating about 0.23 per unit of risk. If you would invest  451,502  in Rotshtein on September 28, 2024 and sell it today you would earn a total of  147,298  from holding Rotshtein or generate 32.62% return on investment over 90 days.

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

Rotshtein  vs.  Al Bad Massuot Yitzhak

Rotshtein

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rotshtein are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rotshtein sustained solid returns over the last few months and may actually be approaching a breakup point.

Al Bad Massuot

Risk-Adjusted Performance

18 of 100

Solid

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

Pair Trading with Rotshtein and Al Bad

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

The idea behind Rotshtein and Al Bad Massuot Yitzhak 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.