Correlation Between Gilat Satellite and Ciena Corp

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

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

Diversification Opportunities for Gilat Satellite and Ciena Corp

0.04

Correlation Coefficient

Gilat Satellite  Ciena Corp

Significant diversification

The 3 months correlation between Gilat and Ciena is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Gilat Satellite Networks and Ciena Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciena Corp and Gilat Satellite 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 Gilat Satellite Networks are associated (or correlated) with Ciena Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciena Corp has no effect on the direction of Gilat Satellite i.e., Gilat Satellite and Ciena Corp go up and down completely randomly.

Pair Corralation between Gilat Satellite and Ciena Corp

Given the investment horizon of 90 days Gilat Satellite Networks is expected to generate 0.84 times more return on investment than Ciena Corp. However, Gilat Satellite Networks is 1.19 times less risky than Ciena Corp. It trades about 0.06 of its potential returns per unit of risk. Ciena Corp is currently generating about -0.1 per unit of risk. If you would invest  604.00  in Gilat Satellite Networks on December 28, 2024 and sell it today you would earn a total of  58.00  from holding Gilat Satellite Networks or generate 9.6% return on investment over 90 days.

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

Gilat Satellite Networks  vs.  Ciena Corp

Gilat Satellite Networks

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gilat Satellite Networks are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Gilat Satellite unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ciena Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ciena Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Gilat Satellite and Ciena Corp

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

The idea behind Gilat Satellite Networks and Ciena Corp 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.