Correlation Between Nova and Golan Plastic
Can any of the company-specific risk be diversified away by investing in both Nova 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 Nova and Golan Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova and Golan Plastic, you can compare the effects of market volatilities on Nova 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 Nova with a short position of Golan Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova and Golan Plastic.
Diversification Opportunities for Nova and Golan Plastic
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nova and Golan is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nova and Golan Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golan Plastic and Nova 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 Nova 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 Nova i.e., Nova and Golan Plastic go up and down completely randomly.
Pair Corralation between Nova and Golan Plastic
Assuming the 90 days trading horizon Nova is expected to under-perform the Golan Plastic. In addition to that, Nova is 1.37 times more volatile than Golan Plastic. It trades about -0.1 of its total potential returns per unit of risk. Golan Plastic is currently generating about 0.39 per unit of volatility. 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 Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Nova vs. Golan Plastic
Performance |
Timeline |
Nova |
Golan Plastic |
Nova and Golan Plastic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nova and Golan Plastic
The main advantage of trading using opposite Nova and Golan Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova 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 Nova 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.Golan Plastic vs. Arad | Golan Plastic vs. Alony Hetz Properties | Golan Plastic vs. Airport City | Golan Plastic vs. Harel Insurance Investments |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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