Correlation Between Ravad and Tefron

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

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

Diversification Opportunities for Ravad and Tefron

-0.2

Correlation Coefficient

Ravad  Tefron

Good diversification

The 3 months correlation between Ravad and Tefron is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ravad and Tefron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tefron and Ravad 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 Ravad are associated (or correlated) with Tefron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tefron has no effect on the direction of Ravad i.e., Ravad and Tefron go up and down completely randomly.

Pair Corralation between Ravad and Tefron

Assuming the 90 days trading horizon Ravad is expected to generate 1.01 times more return on investment than Tefron. However, Ravad is 1.01 times more volatile than Tefron. It trades about 0.08 of its potential returns per unit of risk. Tefron is currently generating about -0.04 per unit of risk. If you would invest  65,990  in Ravad on April 24, 2025 and sell it today you would earn a total of  5,810  from holding Ravad or generate 8.8% return on investment over 90 days.

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

Ravad  vs.  Tefron

Ravad

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ravad are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ravad sustained solid returns over the last few months and may actually be approaching a breakup point.

Tefron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tefron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tefron is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ravad and Tefron

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

The idea behind Ravad and Tefron 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..