Correlation Between Shufersal and EN Shoham

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

By analyzing existing cross correlation between Shufersal and EN Shoham Business, you can compare the effects of market volatilities on Shufersal and EN Shoham 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 EN Shoham. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shufersal and EN Shoham.

Diversification Opportunities for Shufersal and EN Shoham

0.96

Correlation Coefficient

Shufersal  EN Shoham

Almost no diversification

The 3 months correlation between Shufersal and SHOM is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Shufersal and EN Shoham Business in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EN Shoham Business 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 EN Shoham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EN Shoham Business has no effect on the direction of Shufersal i.e., Shufersal and EN Shoham go up and down completely randomly.

Pair Corralation between Shufersal and EN Shoham

Assuming the 90 days trading horizon Shufersal is expected to generate 1.86 times less return on investment than EN Shoham. But when comparing it to its historical volatility, Shufersal is 1.53 times less risky than EN Shoham. It trades about 0.32 of its potential returns per unit of risk. EN Shoham Business is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  65,494  in EN Shoham Business on September 25, 2024 and sell it today you would earn a total of  11,906  from holding EN Shoham Business or generate 18.18% 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.  EN Shoham Business

Shufersal

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shufersal are ranked lower than 18 (%) 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.

EN Shoham Business

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in EN Shoham Business are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EN Shoham sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shufersal and EN Shoham

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

The idea behind Shufersal and EN Shoham Business 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.