Correlation Between Neto ME and Isrotel L

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

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

Diversification Opportunities for Neto ME and Isrotel L

0.77

Correlation Coefficient

Neto ME  Isrotel L

Poor diversification

The 3 months correlation between Neto and Isrotel is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Neto ME Holdings and Isrotel L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isrotel L and Neto ME 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 Neto ME Holdings are associated (or correlated) with Isrotel L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isrotel L has no effect on the direction of Neto ME i.e., Neto ME and Isrotel L go up and down completely randomly.

Pair Corralation between Neto ME and Isrotel L

Assuming the 90 days trading horizon Neto ME is expected to generate 2.16 times less return on investment than Isrotel L. But when comparing it to its historical volatility, Neto ME Holdings is 1.34 times less risky than Isrotel L. It trades about 0.19 of its potential returns per unit of risk. Isrotel L is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  738,000  in Isrotel L on April 25, 2025 and sell it today you would earn a total of  390,000  from holding Isrotel L or generate 52.85% return on investment over 90 days.

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

Neto ME Holdings  vs.  Isrotel L

Neto ME Holdings

Risk-Adjusted Performance

Good

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

Isrotel L

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Isrotel L are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Isrotel L sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neto ME and Isrotel L

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

The idea behind Neto ME Holdings and Isrotel L 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.