Correlation Between Mobile Max and Golan Plastic

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Can any of the company-specific risk be diversified away by investing in both Mobile Max 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 Mobile Max and Golan Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mobile Max M and Golan Plastic, you can compare the effects of market volatilities on Mobile Max 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 Mobile Max with a short position of Golan Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mobile Max and Golan Plastic.

Diversification Opportunities for Mobile Max and Golan Plastic

-0.69
  Correlation Coefficient

Excellent diversification

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

Pair Corralation between Mobile Max and Golan Plastic

Assuming the 90 days trading horizon Mobile Max M is expected to under-perform the Golan Plastic. But the stock apears to be less risky and, when comparing its historical volatility, Mobile Max M is 1.14 times less risky than Golan Plastic. The stock trades about -0.38 of its potential returns per unit of risk. The Golan Plastic is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  99,000  in Golan Plastic on September 1, 2024 and sell it today you would earn a total of  19,000  from holding Golan Plastic or generate 19.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Mobile Max M  vs.  Golan Plastic

 Performance 
       Timeline  
Mobile Max M 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mobile Max M has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Golan Plastic 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Golan Plastic are ranked lower than 16 (%) 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.

Mobile Max and Golan Plastic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mobile Max and Golan Plastic

The main advantage of trading using opposite Mobile Max and Golan Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mobile Max 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 Mobile Max M 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.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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