Correlation Between Satcom Systems and Gilat Telecom
Can any of the company-specific risk be diversified away by investing in both Satcom Systems 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 Satcom Systems and Gilat Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Satcom Systems and Gilat Telecom Global, you can compare the effects of market volatilities on Satcom Systems 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 Satcom Systems with a short position of Gilat Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Satcom Systems and Gilat Telecom.
Diversification Opportunities for Satcom Systems and Gilat Telecom
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Satcom and Gilat is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Satcom Systems 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 Satcom Systems 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 Satcom Systems 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 Satcom Systems i.e., Satcom Systems and Gilat Telecom go up and down completely randomly.
Pair Corralation between Satcom Systems and Gilat Telecom
Assuming the 90 days trading horizon Satcom Systems is expected to generate 1.13 times less return on investment than Gilat Telecom. In addition to that, Satcom Systems is 1.02 times more volatile than Gilat Telecom Global. It trades about 0.19 of its total potential returns per unit of risk. Gilat Telecom Global is currently generating about 0.22 per unit of volatility. If you would invest 6,700 in Gilat Telecom Global on September 25, 2024 and sell it today you would earn a total of 810.00 from holding Gilat Telecom Global or generate 12.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 94.44% |
Values | Daily Returns |
Satcom Systems vs. Gilat Telecom Global
Performance |
Timeline |
Satcom Systems |
Gilat Telecom Global |
Satcom Systems and Gilat Telecom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Satcom Systems and Gilat Telecom
The main advantage of trading using opposite Satcom Systems and Gilat Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Satcom Systems 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.Satcom Systems vs. Aquarius Engines AM | Satcom Systems vs. BioLight Life Sciences | Satcom Systems vs. Infimer | Satcom Systems vs. GP Global Power |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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