Correlation Between Rotem Shani and Axilion Smart

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

By analyzing existing cross correlation between Rotem Shani Entrepreneurship and Axilion Smart Mobility, you can compare the effects of market volatilities on Rotem Shani and Axilion Smart 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 Rotem Shani with a short position of Axilion Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rotem Shani and Axilion Smart.

Diversification Opportunities for Rotem Shani and Axilion Smart

0.23

Correlation Coefficient

Rotem Shani  Axilion Smart

Modest diversification

The 3 months correlation between Rotem and Axilion is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Rotem Shani Entrepreneurship and Axilion Smart Mobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axilion Smart Mobility and Rotem Shani 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 Rotem Shani Entrepreneurship are associated (or correlated) with Axilion Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axilion Smart Mobility has no effect on the direction of Rotem Shani i.e., Rotem Shani and Axilion Smart go up and down completely randomly.

Pair Corralation between Rotem Shani and Axilion Smart

Assuming the 90 days trading horizon Rotem Shani is expected to generate 1.52 times less return on investment than Axilion Smart. But when comparing it to its historical volatility, Rotem Shani Entrepreneurship is 3.14 times less risky than Axilion Smart. It trades about 0.15 of its potential returns per unit of risk. Axilion Smart Mobility is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,220  in Axilion Smart Mobility on September 28, 2024 and sell it today you would earn a total of  600.00  from holding Axilion Smart Mobility or generate 14.22% return on investment over 90 days.

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

Rotem Shani Entrepreneurship  vs.  Axilion Smart Mobility

Rotem Shani Entrepre

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rotem Shani Entrepreneurship are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rotem Shani sustained solid returns over the last few months and may actually be approaching a breakup point.

Axilion Smart Mobility

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Axilion Smart Mobility are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Axilion Smart sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rotem Shani and Axilion Smart

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

The idea behind Rotem Shani Entrepreneurship and Axilion Smart Mobility 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.