Correlation Between Isras Investment and Retailors

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

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

Diversification Opportunities for Isras Investment and Retailors

0.71

Correlation Coefficient

Isras Investment  Retailors

Poor diversification

The 3 months correlation between Isras and Retailors is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Isras Investment and Retailors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retailors and Isras Investment 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 Isras Investment are associated (or correlated) with Retailors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retailors has no effect on the direction of Isras Investment i.e., Isras Investment and Retailors go up and down completely randomly.

Pair Corralation between Isras Investment and Retailors

Assuming the 90 days trading horizon Isras Investment is expected to generate 1.26 times less return on investment than Retailors. But when comparing it to its historical volatility, Isras Investment is 2.41 times less risky than Retailors. It trades about 0.52 of its potential returns per unit of risk. Retailors is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  652,400  in Retailors on September 5, 2024 and sell it today you would earn a total of  107,600  from holding Retailors or generate 16.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Isras Investment  vs.  Retailors

Isras Investment

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Isras Investment are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Isras Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Retailors

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Retailors are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Retailors sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Isras Investment and Retailors

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

The idea behind Isras Investment and Retailors 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.