Correlation Between First International and Satcom Systems
Can any of the company-specific risk be diversified away by investing in both First International and Satcom Systems 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 First International and Satcom Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First International Bank and Satcom Systems, you can compare the effects of market volatilities on First International and Satcom Systems 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 First International with a short position of Satcom Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and Satcom Systems.
Diversification Opportunities for First International and Satcom Systems
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Satcom is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and Satcom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satcom Systems and First International 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 First International Bank are associated (or correlated) with Satcom Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satcom Systems has no effect on the direction of First International i.e., First International and Satcom Systems go up and down completely randomly.
Pair Corralation between First International and Satcom Systems
Assuming the 90 days trading horizon First International Bank is expected to generate 0.42 times more return on investment than Satcom Systems. However, First International Bank is 2.39 times less risky than Satcom Systems. It trades about 0.38 of its potential returns per unit of risk. Satcom Systems is currently generating about -0.05 per unit of risk. If you would invest 1,609,000 in First International Bank on August 26, 2024 and sell it today you would earn a total of 106,000 from holding First International Bank or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First International Bank vs. Satcom Systems
Performance |
| Timeline |
| First International Bank |
| Satcom Systems |
First International and Satcom Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First International and Satcom Systems
The main advantage of trading using opposite First International and Satcom Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First International position performs unexpectedly, Satcom Systems 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 Satcom Systems will offset losses from the drop in Satcom Systems' long position.| First International vs. Bank Hapoalim | First International vs. Israel Discount Bank | First International vs. Mizrahi Tefahot | First International vs. Bezeq Israeli Telecommunication |
| Satcom Systems vs. Gamatronic Electronic Industries | Satcom Systems vs. Homebiogas | Satcom Systems vs. Aura Investments | Satcom Systems vs. Libra Insurance |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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