Correlation Between Scope Metals and Gilat Telecom

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

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

Diversification Opportunities for Scope Metals and Gilat Telecom

0.14

Correlation Coefficient

Scope Metals  Gilat Telecom

Average diversification

The 3 months correlation between Scope and Gilat is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Scope Metals Group 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 Scope Metals 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 Scope Metals Group 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 Scope Metals i.e., Scope Metals and Gilat Telecom go up and down completely randomly.

Pair Corralation between Scope Metals and Gilat Telecom

Assuming the 90 days trading horizon Scope Metals Group is expected to generate 0.8 times more return on investment than Gilat Telecom. However, Scope Metals Group is 1.25 times less risky than Gilat Telecom. It trades about -0.06 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  1,402,000  in Scope Metals Group on December 29, 2024 and sell it today you would lose (96,000) from holding Scope Metals Group or give up 6.85% of portfolio value over 90 days.

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

Scope Metals Group  vs.  Gilat Telecom Global

Scope Metals Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scope Metals Group 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.

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 Scope Metals and Gilat Telecom

The main advantage of trading using opposite Scope Metals and Gilat Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scope Metals 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 Scope Metals Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.