Correlation Between Gilat Telecom and Axilion Smart

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

By analyzing existing cross correlation between Gilat Telecom Global and Axilion Smart Mobility, you can compare the effects of market volatilities on Gilat Telecom and Axilion Smart 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 Telecom with a short position of Axilion Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilat Telecom and Axilion Smart.

Diversification Opportunities for Gilat Telecom and Axilion Smart

0.5

Correlation Coefficient

Gilat Telecom  Axilion Smart

Very weak diversification

The 3 months correlation between Gilat and Axilion is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Gilat Telecom Global and Axilion Smart Mobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axilion Smart Mobility and Gilat Telecom 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 Telecom Global are associated (or correlated) with Axilion Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axilion Smart Mobility has no effect on the direction of Gilat Telecom i.e., Gilat Telecom and Axilion Smart go up and down completely randomly.

Pair Corralation between Gilat Telecom and Axilion Smart

Assuming the 90 days trading horizon Gilat Telecom Global is expected to generate 0.59 times more return on investment than Axilion Smart. However, Gilat Telecom Global is 1.7 times less risky than Axilion Smart. It trades about 0.12 of its potential returns per unit of risk. Axilion Smart Mobility is currently generating about -0.07 per unit of risk. If you would invest  7,520  in Gilat Telecom Global on October 25, 2024 and sell it today you would earn a total of  370.00  from holding Gilat Telecom Global or generate 4.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Gilat Telecom Global  vs.  Axilion Smart Mobility

Gilat Telecom Global

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gilat Telecom Global are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gilat Telecom sustained solid returns over the last few months and may actually be approaching a breakup point.

Axilion Smart Mobility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axilion Smart Mobility has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Gilat Telecom and Axilion Smart

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

The idea behind Gilat Telecom Global and Axilion Smart Mobility 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.