Correlation Between Mivtach Shamir and Afcon Holdings

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

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

Diversification Opportunities for Mivtach Shamir and Afcon Holdings

0.28

Correlation Coefficient

Mivtach Shamir  Afcon Holdings

Modest diversification

The 3 months correlation between Mivtach and Afcon is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mivtach Shamir and Afcon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afcon Holdings and Mivtach Shamir 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 Mivtach Shamir are associated (or correlated) with Afcon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afcon Holdings has no effect on the direction of Mivtach Shamir i.e., Mivtach Shamir and Afcon Holdings go up and down completely randomly.

Pair Corralation between Mivtach Shamir and Afcon Holdings

Assuming the 90 days trading horizon Mivtach Shamir is expected to under-perform the Afcon Holdings. In addition to that, Mivtach Shamir is 1.4 times more volatile than Afcon Holdings. It trades about -0.27 of its total potential returns per unit of risk. Afcon Holdings is currently generating about -0.18 per unit of volatility. If you would invest  989,900  in Afcon Holdings on February 1, 2024 and sell it today you would lose (38,900) from holding Afcon Holdings or give up 3.93% of portfolio value over 90 days.

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

Mivtach Shamir  vs.  Afcon Holdings

Mivtach Shamir

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Mivtach Shamir has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Mivtach Shamir sustained solid returns over the last few months and may actually be approaching a breakup point.

Afcon Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mivtach Shamir and Afcon Holdings

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

The idea behind Mivtach Shamir and Afcon Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.