Correlation Between Sofwave Medical and Gilat Telecom
Can any of the company-specific risk be diversified away by investing in both Sofwave Medical 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 Sofwave Medical and Gilat Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sofwave Medical and Gilat Telecom Global, you can compare the effects of market volatilities on Sofwave Medical 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 Sofwave Medical with a short position of Gilat Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofwave Medical and Gilat Telecom.
Diversification Opportunities for Sofwave Medical and Gilat Telecom
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sofwave and Gilat is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sofwave Medical 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 Sofwave Medical 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 Sofwave Medical 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 Sofwave Medical i.e., Sofwave Medical and Gilat Telecom go up and down completely randomly.
Pair Corralation between Sofwave Medical and Gilat Telecom
Assuming the 90 days trading horizon Sofwave Medical is expected to generate 1.66 times more return on investment than Gilat Telecom. However, Sofwave Medical is 1.66 times more volatile than Gilat Telecom Global. It trades about 0.17 of its potential returns per unit of risk. Gilat Telecom Global is currently generating about -0.02 per unit of risk. If you would invest 151,000 in Sofwave Medical on November 3, 2024 and sell it today you would earn a total of 18,200 from holding Sofwave Medical or generate 12.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sofwave Medical vs. Gilat Telecom Global
Performance |
| Timeline |
| Sofwave Medical |
| Gilat Telecom Global |
Sofwave Medical and Gilat Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sofwave Medical and Gilat Telecom
The main advantage of trading using opposite Sofwave Medical and Gilat Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sofwave Medical 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.| Sofwave Medical vs. Unic tech Limited Partnership | Sofwave Medical vs. Millennium Food Tech LP | Sofwave Medical vs. Insuline Medical | Sofwave Medical vs. Spuntech |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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