Correlation Between Oil Refineries and Hod Assaf

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

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

Diversification Opportunities for Oil Refineries and Hod Assaf

0.27

Correlation Coefficient

Oil Refineries  Hod Assaf

Modest diversification

The 3 months correlation between Oil and Hod is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Oil Refineries and Hod Assaf Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hod Assaf Industries and Oil Refineries 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 Oil Refineries are associated (or correlated) with Hod Assaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hod Assaf Industries has no effect on the direction of Oil Refineries i.e., Oil Refineries and Hod Assaf go up and down completely randomly.

Pair Corralation between Oil Refineries and Hod Assaf

Assuming the 90 days trading horizon Oil Refineries is expected to under-perform the Hod Assaf. But the stock apears to be less risky and, when comparing its historical volatility, Oil Refineries is 1.92 times less risky than Hod Assaf. The stock trades about -0.07 of its potential returns per unit of risk. The Hod Assaf Industries is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  404,500  in Hod Assaf Industries on September 15, 2024 and sell it today you would earn a total of  101,200  from holding Hod Assaf Industries or generate 25.02% return on investment over 90 days.

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

Oil Refineries  vs.  Hod Assaf Industries

Oil Refineries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Refineries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Oil Refineries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hod Assaf Industries

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hod Assaf Industries are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Hod Assaf sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oil Refineries and Hod Assaf

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

The idea behind Oil Refineries and Hod Assaf Industries 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.