Correlation Between Shapir Engineering and Brand

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

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

Diversification Opportunities for Shapir Engineering and Brand

0.84

Correlation Coefficient

Shapir Engineering  Brand

Very poor diversification

The 3 months correlation between Shapir and Brand is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shapir Engineering Industry and Brand Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brand Group and Shapir Engineering 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 Shapir Engineering Industry are associated (or correlated) with Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brand Group has no effect on the direction of Shapir Engineering i.e., Shapir Engineering and Brand go up and down completely randomly.

Pair Corralation between Shapir Engineering and Brand

Assuming the 90 days trading horizon Shapir Engineering Industry is expected to generate 1.01 times more return on investment than Brand. However, Shapir Engineering is 1.01 times more volatile than Brand Group. It trades about 0.37 of its potential returns per unit of risk. Brand Group is currently generating about 0.22 per unit of risk. If you would invest  196,000  in Shapir Engineering Industry on September 24, 2024 and sell it today you would earn a total of  90,300  from holding Shapir Engineering Industry or generate 46.07% return on investment over 90 days.

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

Shapir Engineering Industry  vs.  Brand Group

Shapir Engineering

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Shapir Engineering Industry are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shapir Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

Brand Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brand Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brand sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shapir Engineering and Brand

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

The idea behind Shapir Engineering Industry and Brand Group 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.