Correlation Between Azrieli and Afi Properties

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

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

Diversification Opportunities for Azrieli and Afi Properties

0.38

Correlation Coefficient

Azrieli  Afi Properties

Weak diversification

The 3 months correlation between Azrieli and Afi is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Azrieli Group and Afi Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afi Properties and Azrieli 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 Azrieli Group are associated (or correlated) with Afi Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afi Properties has no effect on the direction of Azrieli i.e., Azrieli and Afi Properties go up and down completely randomly.

Pair Corralation between Azrieli and Afi Properties

Assuming the 90 days trading horizon Azrieli Group is expected to generate 1.32 times more return on investment than Afi Properties. However, Azrieli is 1.32 times more volatile than Afi Properties. It trades about -0.02 of its potential returns per unit of risk. Afi Properties is currently generating about -0.05 per unit of risk. If you would invest  2,460,000  in Azrieli Group on February 12, 2024 and sell it today you would lose (15,000) from holding Azrieli Group or give up 0.61% of portfolio value over 90 days.

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

Azrieli Group  vs.  Afi Properties

Azrieli Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Azrieli Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Azrieli may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Afi Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afi Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Afi Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Azrieli and Afi Properties

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

The idea behind Azrieli Group and Afi Properties 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.