Correlation Between Rotem Shani and C Mer

Can any of the company-specific risk be diversified away by investing in both Rotem Shani and C Mer 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 C Mer 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 C Mer Industries, you can compare the effects of market volatilities on Rotem Shani and C Mer 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 C Mer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rotem Shani and C Mer.

Diversification Opportunities for Rotem Shani and C Mer

0.78

Correlation Coefficient

Rotem Shani  C Mer

Poor diversification

The 3 months correlation between Rotem and CMER is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Rotem Shani Entrepreneurship and C Mer Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Mer Industries 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 C Mer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Mer Industries has no effect on the direction of Rotem Shani i.e., Rotem Shani and C Mer go up and down completely randomly.

Pair Corralation between Rotem Shani and C Mer

Assuming the 90 days trading horizon Rotem Shani Entrepreneurship is expected to under-perform the C Mer. But the stock apears to be less risky and, when comparing its historical volatility, Rotem Shani Entrepreneurship is 1.95 times less risky than C Mer. The stock trades about -0.18 of its potential returns per unit of risk. The C Mer Industries is currently generating about 0.72 of returns per unit of risk over similar time horizon. If you would invest  185,000  in C Mer Industries on September 28, 2024 and sell it today you would earn a total of  116,400  from holding C Mer Industries or generate 62.92% return on investment over 90 days.

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

Rotem Shani Entrepreneurship  vs.  C Mer Industries

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.

C Mer Industries

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in C Mer Industries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, C Mer sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rotem Shani and C Mer

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

The idea behind Rotem Shani Entrepreneurship and C Mer 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.