Correlation Between Dan Hotels and Golan Plastic

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

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

Diversification Opportunities for Dan Hotels and Golan Plastic

0.14

Correlation Coefficient

Dan Hotels  Golan Plastic

Average diversification

The 3 months correlation between Dan and Golan is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dan Hotels and Golan Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golan Plastic and Dan Hotels 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 Dan Hotels 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 Dan Hotels i.e., Dan Hotels and Golan Plastic go up and down completely randomly.

Pair Corralation between Dan Hotels and Golan Plastic

Assuming the 90 days trading horizon Dan Hotels is expected to generate 0.66 times more return on investment than Golan Plastic. However, Dan Hotels is 1.51 times less risky than Golan Plastic. It trades about 0.08 of its potential returns per unit of risk. Golan Plastic is currently generating about -0.19 per unit of risk. If you would invest  221,800  in Dan Hotels on December 29, 2024 and sell it today you would earn a total of  14,100  from holding Dan Hotels or generate 6.36% return on investment over 90 days.

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

Dan Hotels  vs.  Golan Plastic

Dan Hotels

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dan Hotels are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dan Hotels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Golan Plastic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golan Plastic 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dan Hotels and Golan Plastic

The main advantage of trading using opposite Dan Hotels and Golan Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dan Hotels 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 Dan Hotels 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.