Correlation Between Gilat Telecom and Opko Health

Can any of the company-specific risk be diversified away by investing in both Gilat Telecom and Opko Health 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 Opko Health 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 Opko Health, you can compare the effects of market volatilities on Gilat Telecom and Opko Health 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 Opko Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilat Telecom and Opko Health.

Diversification Opportunities for Gilat Telecom and Opko Health

-0.72

Correlation Coefficient

Gilat Telecom  Opko Health

Pay attention - limited upside

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

Pair Corralation between Gilat Telecom and Opko Health

Assuming the 90 days trading horizon Gilat Telecom Global is expected to under-perform the Opko Health. But the stock apears to be less risky and, when comparing its historical volatility, Gilat Telecom Global is 1.03 times less risky than Opko Health. The stock trades about -0.06 of its potential returns per unit of risk. The Opko Health is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  53,470  in Opko Health on December 29, 2024 and sell it today you would earn a total of  10,840  from holding Opko Health or generate 20.27% return on investment over 90 days.

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

Gilat Telecom Global  vs.  Opko Health

Gilat Telecom Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gilat Telecom Global 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.

Opko Health

Risk-Adjusted Performance

Good

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

Pair Trading with Gilat Telecom and Opko Health

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

The idea behind Gilat Telecom Global and Opko Health 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.