Correlation Between Golan Plastic and Arad
Can any of the company-specific risk be diversified away by investing in both Golan Plastic and Arad 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 Golan Plastic and Arad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golan Plastic and Arad, you can compare the effects of market volatilities on Golan Plastic and Arad 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 Golan Plastic with a short position of Arad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golan Plastic and Arad.
Diversification Opportunities for Golan Plastic and Arad
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Golan and Arad is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Golan Plastic and Arad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arad and Golan Plastic 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 Golan Plastic are associated (or correlated) with Arad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arad has no effect on the direction of Golan Plastic i.e., Golan Plastic and Arad go up and down completely randomly.
Pair Corralation between Golan Plastic and Arad
Assuming the 90 days trading horizon Golan Plastic is expected to generate 1.53 times more return on investment than Arad. However, Golan Plastic is 1.53 times more volatile than Arad. It trades about 0.06 of its potential returns per unit of risk. Arad is currently generating about 0.04 per unit of risk. If you would invest 84,701 in Golan Plastic on December 1, 2024 and sell it today you would earn a total of 53,299 from holding Golan Plastic or generate 62.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Golan Plastic vs. Arad
Performance |
Timeline |
Golan Plastic |
Arad |
Golan Plastic and Arad Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Golan Plastic and Arad
The main advantage of trading using opposite Golan Plastic and Arad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golan Plastic position performs unexpectedly, Arad 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 Arad will offset losses from the drop in Arad's long position.Golan Plastic vs. Brimag L | Golan Plastic vs. Neto ME Holdings | Golan Plastic vs. Palram | Golan Plastic vs. Ludan Engineering Co |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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