Correlation Between Payment Financial and Gilat Telecom

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

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

Diversification Opportunities for Payment Financial and Gilat Telecom

0.16

Correlation Coefficient

Payment Financial  Gilat Telecom

Average diversification

The 3 months correlation between Payment and Gilat is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Payment Financial 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 Payment Financial 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 Payment Financial 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 Payment Financial i.e., Payment Financial and Gilat Telecom go up and down completely randomly.

Pair Corralation between Payment Financial and Gilat Telecom

Assuming the 90 days trading horizon Payment Financial Technologies is expected to generate 1.57 times more return on investment than Gilat Telecom. However, Payment Financial is 1.57 times more volatile than Gilat Telecom Global. It trades about 0.12 of its potential returns per unit of risk. Gilat Telecom Global is currently generating about -0.06 per unit of risk. If you would invest  31,785  in Payment Financial Technologies on December 22, 2024 and sell it today you would earn a total of  7,015  from holding Payment Financial Technologies or generate 22.07% return on investment over 90 days.

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

Payment Financial Technologies  vs.  Gilat Telecom Global

Payment Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Payment Financial Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Payment Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Payment Financial and Gilat Telecom

The main advantage of trading using opposite Payment Financial and Gilat Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payment Financial 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 Payment Financial 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.