Correlation Between Golan Plastic and Ralco Agencies

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

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

Diversification Opportunities for Golan Plastic and Ralco Agencies

-0.36

Correlation Coefficient

Golan Plastic  Ralco Agencies

Very good diversification

The 3 months correlation between Golan and Ralco is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Golan Plastic and Ralco Agencies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ralco Agencies 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 Ralco Agencies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ralco Agencies has no effect on the direction of Golan Plastic i.e., Golan Plastic and Ralco Agencies go up and down completely randomly.

Pair Corralation between Golan Plastic and Ralco Agencies

Assuming the 90 days trading horizon Golan Plastic is expected to under-perform the Ralco Agencies. In addition to that, Golan Plastic is 1.21 times more volatile than Ralco Agencies. It trades about -0.19 of its total potential returns per unit of risk. Ralco Agencies is currently generating about 0.21 per unit of volatility. If you would invest  450,000  in Ralco Agencies on December 30, 2024 and sell it today you would earn a total of  108,700  from holding Ralco Agencies or generate 24.16% 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.  Ralco Agencies

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.

Ralco Agencies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ralco Agencies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ralco Agencies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golan Plastic and Ralco Agencies

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

The idea behind Golan Plastic and Ralco Agencies 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.