Correlation Between Michman Basad and Jacob Finance

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

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

Diversification Opportunities for Michman Basad and Jacob Finance

0.69

Correlation Coefficient

Michman Basad  Jacob Finance

Poor diversification

The 3 months correlation between Michman and Jacob is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Michman Basad and Jacob Finance And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Finance And and Michman Basad 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 Michman Basad are associated (or correlated) with Jacob Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Finance And has no effect on the direction of Michman Basad i.e., Michman Basad and Jacob Finance go up and down completely randomly.

Pair Corralation between Michman Basad and Jacob Finance

Assuming the 90 days trading horizon Michman Basad is expected to generate 3.2 times less return on investment than Jacob Finance. But when comparing it to its historical volatility, Michman Basad is 2.04 times less risky than Jacob Finance. It trades about 0.11 of its potential returns per unit of risk. Jacob Finance And is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  93,700  in Jacob Finance And on August 25, 2024 and sell it today you would earn a total of  113,900  from holding Jacob Finance And or generate 121.56% return on investment over 90 days.

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

Michman Basad  vs.  Jacob Finance And

Michman Basad

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Michman Basad are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Michman Basad sustained solid returns over the last few months and may actually be approaching a breakup point.

Jacob Finance And

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacob Finance And are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jacob Finance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Michman Basad and Jacob Finance

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

The idea behind Michman Basad and Jacob Finance 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.