Correlation Between Axilion Smart and Golan Plastic

Can any of the company-specific risk be diversified away by investing in both Axilion Smart and Golan Plastic 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 Axilion Smart and Golan Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Axilion Smart Mobility and Golan Plastic, you can compare the effects of market volatilities on Axilion Smart and Golan Plastic 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 Axilion Smart with a short position of Golan Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axilion Smart and Golan Plastic.

Diversification Opportunities for Axilion Smart and Golan Plastic

0.21

Correlation Coefficient

Axilion Smart  Golan Plastic

Modest diversification

The 3 months correlation between Axilion and Golan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Axilion Smart Mobility and Golan Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golan Plastic and Axilion Smart 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 Axilion Smart Mobility are associated (or correlated) with Golan Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golan Plastic has no effect on the direction of Axilion Smart i.e., Axilion Smart and Golan Plastic go up and down completely randomly.

Pair Corralation between Axilion Smart and Golan Plastic

Assuming the 90 days trading horizon Axilion Smart is expected to generate 1.45 times less return on investment than Golan Plastic. In addition to that, Axilion Smart is 2.75 times more volatile than Golan Plastic. It trades about 0.09 of its total potential returns per unit of risk. Golan Plastic is currently generating about 0.36 per unit of volatility. If you would invest  95,840  in Golan Plastic on September 27, 2024 and sell it today you would earn a total of  41,960  from holding Golan Plastic or generate 43.78% return on investment over 90 days.

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

Axilion Smart Mobility  vs.  Golan Plastic

Axilion Smart Mobility

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Axilion Smart Mobility are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Axilion Smart sustained solid returns over the last few months and may actually be approaching a breakup point.

Golan Plastic

Risk-Adjusted Performance

28 of 100

Strong

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

Pair Trading with Axilion Smart and Golan Plastic

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

The idea behind Axilion Smart Mobility and Golan Plastic 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.