Correlation Between Rapac Communication and Gazit Globe

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

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

Diversification Opportunities for Rapac Communication and Gazit Globe

0.68

Correlation Coefficient

Rapac Communication  Gazit Globe

Poor diversification

The 3 months correlation between Rapac and Gazit is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rapac Communication Infrastruc and Gazit Globe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gazit Globe and Rapac Communication 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 Rapac Communication Infrastructure are associated (or correlated) with Gazit Globe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gazit Globe has no effect on the direction of Rapac Communication i.e., Rapac Communication and Gazit Globe go up and down completely randomly.

Pair Corralation between Rapac Communication and Gazit Globe

Assuming the 90 days trading horizon Rapac Communication Infrastructure is expected to under-perform the Gazit Globe. But the stock apears to be less risky and, when comparing its historical volatility, Rapac Communication Infrastructure is 1.98 times less risky than Gazit Globe. The stock trades about -0.04 of its potential returns per unit of risk. The Gazit Globe is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  122,400  in Gazit Globe on September 3, 2024 and sell it today you would earn a total of  33,900  from holding Gazit Globe or generate 27.7% return on investment over 90 days.

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

Rapac Communication Infrastruc  vs.  Gazit Globe

Rapac Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rapac Communication Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Rapac Communication is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gazit Globe

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gazit Globe are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gazit Globe sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rapac Communication and Gazit Globe

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

The idea behind Rapac Communication Infrastructure and Gazit Globe 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..