Correlation Between Shikun Binui and Rani Zim

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

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

Diversification Opportunities for Shikun Binui and Rani Zim

0.94

Correlation Coefficient

Shikun Binui  Rani Zim

Almost no diversification

The 3 months correlation between Shikun and Rani is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Shikun Binui and Rani Zim Shopping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rani Zim Shopping and Shikun Binui 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 Shikun Binui are associated (or correlated) with Rani Zim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rani Zim Shopping has no effect on the direction of Shikun Binui i.e., Shikun Binui and Rani Zim go up and down completely randomly.

Pair Corralation between Shikun Binui and Rani Zim

Assuming the 90 days trading horizon Shikun Binui is expected to generate 1.11 times more return on investment than Rani Zim. However, Shikun Binui is 1.11 times more volatile than Rani Zim Shopping. It trades about 0.04 of its potential returns per unit of risk. Rani Zim Shopping is currently generating about 0.04 per unit of risk. If you would invest  104,800  in Shikun Binui on September 17, 2024 and sell it today you would earn a total of  35,100  from holding Shikun Binui or generate 33.49% return on investment over 90 days.

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

Shikun Binui  vs.  Rani Zim Shopping

Shikun Binui

Risk-Adjusted Performance

31 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Shikun Binui are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shikun Binui sustained solid returns over the last few months and may actually be approaching a breakup point.

Rani Zim Shopping

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Rani Zim Shopping are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rani Zim sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shikun Binui and Rani Zim

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

The idea behind Shikun Binui and Rani Zim Shopping 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.