Correlation Between Lineage Cell and Gilat Telecom

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

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

Diversification Opportunities for Lineage Cell and Gilat Telecom

-0.26

Correlation Coefficient

Lineage Cell  Gilat Telecom

Very good diversification

The 3 months correlation between Lineage and Gilat is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lineage Cell Therapeutics and Gilat Telecom Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gilat Telecom Global and Lineage Cell 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 Lineage Cell Therapeutics are associated (or correlated) with Gilat Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gilat Telecom Global has no effect on the direction of Lineage Cell i.e., Lineage Cell and Gilat Telecom go up and down completely randomly.

Pair Corralation between Lineage Cell and Gilat Telecom

Assuming the 90 days trading horizon Lineage Cell Therapeutics is expected to generate 1.83 times more return on investment than Gilat Telecom. However, Lineage Cell is 1.83 times more volatile than Gilat Telecom Global. It trades about 0.23 of its potential returns per unit of risk. Gilat Telecom Global is currently generating about 0.18 per unit of risk. If you would invest  19,260  in Lineage Cell Therapeutics on October 27, 2024 and sell it today you would earn a total of  3,340  from holding Lineage Cell Therapeutics or generate 17.34% return on investment over 90 days.

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

Lineage Cell Therapeutics  vs.  Gilat Telecom Global

Lineage Cell Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lineage Cell Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Gilat Telecom Global

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gilat Telecom Global are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gilat Telecom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lineage Cell and Gilat Telecom

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

The idea behind Lineage Cell Therapeutics and Gilat Telecom Global 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.