Correlation Between Aran Research and Golan Plastic

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

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

Diversification Opportunities for Aran Research and Golan Plastic

0.29

Correlation Coefficient

Aran Research  Golan Plastic

Modest diversification

The 3 months correlation between Aran and Golan is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aran Research and and Golan Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golan Plastic and Aran Research 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 Aran Research and are associated (or correlated) with Golan Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golan Plastic has no effect on the direction of Aran Research i.e., Aran Research and Golan Plastic go up and down completely randomly.

Pair Corralation between Aran Research and Golan Plastic

Assuming the 90 days trading horizon Aran Research and is expected to under-perform the Golan Plastic. But the stock apears to be less risky and, when comparing its historical volatility, Aran Research and is 1.39 times less risky than Golan Plastic. The stock trades about -0.01 of its potential returns per unit of risk. The Golan Plastic is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  87,193  in Golan Plastic on September 13, 2024 and sell it today you would earn a total of  49,407  from holding Golan Plastic or generate 56.66% return on investment over 90 days.

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

Aran Research and  vs.  Golan Plastic

Aran Research

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aran Research and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aran Research may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Golan Plastic

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Golan Plastic are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Golan Plastic sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aran Research and Golan Plastic

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

The idea behind Aran Research and and Golan Plastic 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.