Correlation Between Golan Plastic and Quicklizard

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

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

Diversification Opportunities for Golan Plastic and Quicklizard

0.52

Correlation Coefficient

Golan Plastic  Quicklizard

Very weak diversification

The 3 months correlation between Golan and Quicklizard is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Golan Plastic and Quicklizard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quicklizard and Golan Plastic 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 Golan Plastic are associated (or correlated) with Quicklizard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quicklizard has no effect on the direction of Golan Plastic i.e., Golan Plastic and Quicklizard go up and down completely randomly.

Pair Corralation between Golan Plastic and Quicklizard

Assuming the 90 days trading horizon Golan Plastic is expected to generate 1.83 times less return on investment than Quicklizard. But when comparing it to its historical volatility, Golan Plastic is 1.09 times less risky than Quicklizard. It trades about 0.05 of its potential returns per unit of risk. Quicklizard is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  147,800  in Quicklizard on September 25, 2024 and sell it today you would earn a total of  206,500  from holding Quicklizard or generate 139.72% return on investment over 90 days.

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

Golan Plastic  vs.  Quicklizard

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.

Quicklizard

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Golan Plastic and Quicklizard

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

The idea behind Golan Plastic and Quicklizard 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.