Correlation Between Elbit Medical and Golan Plastic

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

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

Diversification Opportunities for Elbit Medical and Golan Plastic

0.12

Correlation Coefficient

Elbit Medical  Golan Plastic

Average diversification

The 3 months correlation between Elbit and Golan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Medical Technologies and Golan Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golan Plastic and Elbit Medical 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 Elbit Medical Technologies 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 Elbit Medical i.e., Elbit Medical and Golan Plastic go up and down completely randomly.

Pair Corralation between Elbit Medical and Golan Plastic

Assuming the 90 days trading horizon Elbit Medical is expected to generate 15.25 times less return on investment than Golan Plastic. In addition to that, Elbit Medical is 1.47 times more volatile than Golan Plastic. It trades about 0.01 of its total potential returns per unit of risk. Golan Plastic is currently generating about 0.33 per unit of volatility. If you would invest  93,900  in Golan Plastic on September 15, 2024 and sell it today you would earn a total of  42,700  from holding Golan Plastic or generate 45.47% return on investment over 90 days.

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

Elbit Medical Technologies  vs.  Golan Plastic

Elbit Medical Techno

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elbit Medical Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Elbit Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Golan Plastic

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Golan Plastic are ranked lower than 26 (%) 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 Elbit Medical and Golan Plastic

The main advantage of trading using opposite Elbit Medical and Golan Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Medical 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 Elbit Medical Technologies 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.