Correlation Between Golan Plastic and Rapac Communication

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

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

Diversification Opportunities for Golan Plastic and Rapac Communication

0.72

Correlation Coefficient

Golan Plastic  Rapac Communication

Poor diversification

The 3 months correlation between Golan and Rapac is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Golan Plastic and Rapac Communication Infrastruc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rapac Communication 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 Rapac Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rapac Communication has no effect on the direction of Golan Plastic i.e., Golan Plastic and Rapac Communication go up and down completely randomly.

Pair Corralation between Golan Plastic and Rapac Communication

Assuming the 90 days trading horizon Golan Plastic is expected to generate 1.34 times more return on investment than Rapac Communication. However, Golan Plastic is 1.34 times more volatile than Rapac Communication Infrastructure. It trades about 0.67 of its potential returns per unit of risk. Rapac Communication Infrastructure is currently generating about 0.3 per unit of risk. If you would invest  102,000  in Golan Plastic on September 13, 2024 and sell it today you would earn a total of  36,000  from holding Golan Plastic or generate 35.29% return on investment over 90 days.

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

Golan Plastic  vs.  Rapac Communication Infrastruc

Golan Plastic

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Golan Plastic are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Golan Plastic sustained solid returns over the last few months and may actually be approaching a breakup point.

Rapac Communication

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rapac Communication Infrastructure are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rapac Communication sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golan Plastic and Rapac Communication

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

The idea behind Golan Plastic and Rapac Communication Infrastructure 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.