Correlation Between Orbit Technologies and Gilat Telecom

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

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

Diversification Opportunities for Orbit Technologies and Gilat Telecom

0.87

Correlation Coefficient

Orbit Technologies  Gilat Telecom

Very poor diversification

The 3 months correlation between Orbit and Gilat is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Orbit Technologies and Gilat Telecom Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gilat Telecom Global and Orbit Technologies 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 Orbit Technologies are associated (or correlated) with Gilat Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gilat Telecom Global has no effect on the direction of Orbit Technologies i.e., Orbit Technologies and Gilat Telecom go up and down completely randomly.

Pair Corralation between Orbit Technologies and Gilat Telecom

Assuming the 90 days trading horizon Orbit Technologies is expected to generate 0.51 times more return on investment than Gilat Telecom. However, Orbit Technologies is 1.95 times less risky than Gilat Telecom. It trades about 0.38 of its potential returns per unit of risk. Gilat Telecom Global is currently generating about 0.12 per unit of risk. If you would invest  295,100  in Orbit Technologies on October 25, 2024 and sell it today you would earn a total of  25,200  from holding Orbit Technologies or generate 8.54% return on investment over 90 days.

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

Orbit Technologies  vs.  Gilat Telecom Global

Orbit Technologies

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Orbit Technologies are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orbit Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Orbit Technologies and Gilat Telecom

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

The idea behind Orbit Technologies and Gilat Telecom Global 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.