Correlation Between Golan Plastic and RSL Electronics
Can any of the company-specific risk be diversified away by investing in both Golan Plastic and RSL Electronics 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 RSL Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golan Plastic and RSL Electronics, you can compare the effects of market volatilities on Golan Plastic and RSL Electronics 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 RSL Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golan Plastic and RSL Electronics.
Diversification Opportunities for Golan Plastic and RSL Electronics
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Golan and RSL is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Golan Plastic and RSL Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RSL Electronics 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 RSL Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RSL Electronics has no effect on the direction of Golan Plastic i.e., Golan Plastic and RSL Electronics go up and down completely randomly.
Pair Corralation between Golan Plastic and RSL Electronics
Assuming the 90 days trading horizon Golan Plastic is expected to generate 0.71 times more return on investment than RSL Electronics. However, Golan Plastic is 1.4 times less risky than RSL Electronics. It trades about 0.43 of its potential returns per unit of risk. RSL Electronics is currently generating about 0.18 per unit of risk. If you would invest 98,480 in Golan Plastic on August 29, 2024 and sell it today you would earn a total of 15,920 from holding Golan Plastic or generate 16.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golan Plastic vs. RSL Electronics
Performance |
| Timeline |
| Golan Plastic |
| RSL Electronics |
Golan Plastic and RSL Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golan Plastic and RSL Electronics
The main advantage of trading using opposite Golan Plastic and RSL Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golan Plastic position performs unexpectedly, RSL Electronics 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 RSL Electronics will offset losses from the drop in RSL Electronics' long position.| Golan Plastic vs. Arad | Golan Plastic vs. Alony Hetz Properties | Golan Plastic vs. Danel | Golan Plastic vs. Airport City |
| RSL Electronics vs. Arad | RSL Electronics vs. Alony Hetz Properties | RSL Electronics vs. Danel | RSL Electronics 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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