Correlation Between EN Shoham and Rapac Communication

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

By analyzing existing cross correlation between EN Shoham Business and Rapac Communication Infrastructure, you can compare the effects of market volatilities on EN Shoham and Rapac Communication 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 EN Shoham with a short position of Rapac Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of EN Shoham and Rapac Communication.

Diversification Opportunities for EN Shoham and Rapac Communication

0.05

Correlation Coefficient

EN Shoham  Rapac Communication

Significant diversification

The 3 months correlation between SHOM and Rapac is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding EN Shoham Business and Rapac Communication Infrastruc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rapac Communication and EN Shoham 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 EN Shoham Business are associated (or correlated) with Rapac Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rapac Communication has no effect on the direction of EN Shoham i.e., EN Shoham and Rapac Communication go up and down completely randomly.

Pair Corralation between EN Shoham and Rapac Communication

Assuming the 90 days trading horizon EN Shoham Business is expected to under-perform the Rapac Communication. In addition to that, EN Shoham is 1.42 times more volatile than Rapac Communication Infrastructure. It trades about -0.16 of its total potential returns per unit of risk. Rapac Communication Infrastructure is currently generating about -0.21 per unit of volatility. If you would invest  263,100  in Rapac Communication Infrastructure on February 1, 2024 and sell it today you would lose (13,100) from holding Rapac Communication Infrastructure or give up 4.98% of portfolio value over 90 days.

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

EN Shoham Business  vs.  Rapac Communication Infrastruc

EN Shoham Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EN Shoham Business has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Rapac Communication

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with EN Shoham and Rapac Communication

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

The idea behind EN Shoham Business and Rapac Communication Infrastructure 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.