Correlation Between Shufersal and Shaniv

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

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

Diversification Opportunities for Shufersal and Shaniv

0.92

Correlation Coefficient

Shufersal  Shaniv

Almost no diversification

The 3 months correlation between Shufersal and Shaniv is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Shufersal and Shaniv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaniv and Shufersal 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 Shufersal are associated (or correlated) with Shaniv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaniv has no effect on the direction of Shufersal i.e., Shufersal and Shaniv go up and down completely randomly.

Pair Corralation between Shufersal and Shaniv

Assuming the 90 days trading horizon Shufersal is expected to generate 1.63 times less return on investment than Shaniv. But when comparing it to its historical volatility, Shufersal is 1.27 times less risky than Shaniv. It trades about 0.19 of its potential returns per unit of risk. Shaniv is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  34,183  in Shaniv on September 29, 2024 and sell it today you would earn a total of  7,587  from holding Shaniv or generate 22.2% return on investment over 90 days.

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

Shufersal  vs.  Shaniv

Shufersal

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shufersal are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Shufersal sustained solid returns over the last few months and may actually be approaching a breakup point.

Shaniv

Risk-Adjusted Performance

18 of 100

Solid

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

Pair Trading with Shufersal and Shaniv

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

The idea behind Shufersal and Shaniv 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.