Correlation Between Opko Health and Gilat Telecom
Can any of the company-specific risk be diversified away by investing in both Opko Health and Gilat Telecom 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 Opko Health and Gilat Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Opko Health and Gilat Telecom Global, you can compare the effects of market volatilities on Opko Health and Gilat Telecom 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 Opko Health with a short position of Gilat Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opko Health and Gilat Telecom.
Diversification Opportunities for Opko Health and Gilat Telecom
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Opko and Gilat is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Opko Health and Gilat Telecom Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gilat Telecom Global and Opko Health 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 Opko Health are associated (or correlated) with Gilat Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gilat Telecom Global has no effect on the direction of Opko Health i.e., Opko Health and Gilat Telecom go up and down completely randomly.
Pair Corralation between Opko Health and Gilat Telecom
Assuming the 90 days trading horizon Opko Health is expected to generate 1.42 times less return on investment than Gilat Telecom. But when comparing it to its historical volatility, Opko Health is 1.22 times less risky than Gilat Telecom. It trades about 0.09 of its potential returns per unit of risk. Gilat Telecom Global is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,140 in Gilat Telecom Global on November 3, 2024 and sell it today you would earn a total of 3,740 from holding Gilat Telecom Global or generate 90.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Opko Health vs. Gilat Telecom Global
Performance |
| Timeline |
| Opko Health |
| Gilat Telecom Global |
Opko Health and Gilat Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Opko Health and Gilat Telecom
The main advantage of trading using opposite Opko Health and Gilat Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opko Health position performs unexpectedly, Gilat Telecom 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 Gilat Telecom will offset losses from the drop in Gilat Telecom's long position.| Opko Health vs. Teva Pharmaceutical Industries | Opko Health vs. Tower Semiconductor | Opko Health vs. Nice | Opko Health vs. Kamada |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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