Correlation Between Gan Shmuel and Golan Plastic

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

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

Diversification Opportunities for Gan Shmuel and Golan Plastic

0.69

Correlation Coefficient

Gan Shmuel  Golan Plastic

Poor diversification

The 3 months correlation between Gan and Golan is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gan Shmuel and Golan Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golan Plastic and Gan Shmuel 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 Gan Shmuel 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 Gan Shmuel i.e., Gan Shmuel and Golan Plastic go up and down completely randomly.

Pair Corralation between Gan Shmuel and Golan Plastic

Assuming the 90 days trading horizon Gan Shmuel is expected to generate 5.91 times less return on investment than Golan Plastic. But when comparing it to its historical volatility, Gan Shmuel is 1.46 times less risky than Golan Plastic. It trades about 0.08 of its potential returns per unit of risk. Golan Plastic is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  93,900  in Golan Plastic on September 13, 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	Significant
Accuracy	97.83%
Values	Daily Returns

Gan Shmuel  vs.  Golan Plastic

Gan Shmuel

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gan Shmuel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gan Shmuel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Gan Shmuel and Golan Plastic

The main advantage of trading using opposite Gan Shmuel and Golan Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gan Shmuel 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 Gan Shmuel 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.