Correlation Between Golan Plastic and Inrom Construction
Can any of the company-specific risk be diversified away by investing in both Golan Plastic and Inrom Construction 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 Inrom Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golan Plastic and Inrom Construction Industries, you can compare the effects of market volatilities on Golan Plastic and Inrom Construction 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 Inrom Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golan Plastic and Inrom Construction.
Diversification Opportunities for Golan Plastic and Inrom Construction
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Golan and Inrom is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Golan Plastic and Inrom Construction Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inrom Construction 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 Inrom Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inrom Construction has no effect on the direction of Golan Plastic i.e., Golan Plastic and Inrom Construction go up and down completely randomly.
Pair Corralation between Golan Plastic and Inrom Construction
Assuming the 90 days trading horizon Golan Plastic is expected to generate 1.46 times less return on investment than Inrom Construction. But when comparing it to its historical volatility, Golan Plastic is 1.22 times less risky than Inrom Construction. It trades about 0.38 of its potential returns per unit of risk. Inrom Construction Industries is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 130,269 in Inrom Construction Industries on August 25, 2024 and sell it today you would earn a total of 25,831 from holding Inrom Construction Industries or generate 19.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golan Plastic vs. Inrom Construction Industries
Performance |
| Timeline |
| Golan Plastic |
| Inrom Construction |
Golan Plastic and Inrom Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golan Plastic and Inrom Construction
The main advantage of trading using opposite Golan Plastic and Inrom Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golan Plastic position performs unexpectedly, Inrom Construction 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 Inrom Construction will offset losses from the drop in Inrom Construction's long position.| Golan Plastic vs. Arad | Golan Plastic vs. Alony Hetz Properties | Golan Plastic vs. Danel | Golan Plastic vs. Airport City |
| Inrom Construction vs. Arad | Inrom Construction vs. Alony Hetz Properties | Inrom Construction vs. Danel | Inrom Construction vs. Airport City |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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