Correlation Between Bank Hapoalim and Ram On

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

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

Diversification Opportunities for Bank Hapoalim and Ram On

0.54

Correlation Coefficient

Bank Hapoalim  Ram On

Very weak diversification

The 3 months correlation between Bank and Ram is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bank Hapoalim and Ram On Investments and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ram On Investments and Bank Hapoalim 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 Bank Hapoalim are associated (or correlated) with Ram On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ram On Investments has no effect on the direction of Bank Hapoalim i.e., Bank Hapoalim and Ram On go up and down completely randomly.

Pair Corralation between Bank Hapoalim and Ram On

Assuming the 90 days trading horizon Bank Hapoalim is expected to generate 21.24 times less return on investment than Ram On. But when comparing it to its historical volatility, Bank Hapoalim is 1.08 times less risky than Ram On. It trades about 0.01 of its potential returns per unit of risk. Ram On Investments and is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  101,000  in Ram On Investments and on February 28, 2024 and sell it today you would earn a total of  10,000  from holding Ram On Investments and or generate 9.9% return on investment over 90 days.

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

Bank Hapoalim  vs.  Ram On Investments and

Bank Hapoalim

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ram On Investments

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ram On Investments and are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ram On sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Hapoalim and Ram On

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

The idea behind Bank Hapoalim and Ram On Investments and 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.