Correlation Between Satcom Systems and Allot Communications
Can any of the company-specific risk be diversified away by investing in both Satcom Systems and Allot Communications 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 Satcom Systems and Allot Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Satcom Systems and Allot Communications, you can compare the effects of market volatilities on Satcom Systems and Allot Communications 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 Satcom Systems with a short position of Allot Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Satcom Systems and Allot Communications.
Diversification Opportunities for Satcom Systems and Allot Communications
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Satcom and Allot is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Satcom Systems and Allot Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allot Communications and Satcom Systems 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 Satcom Systems are associated (or correlated) with Allot Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allot Communications has no effect on the direction of Satcom Systems i.e., Satcom Systems and Allot Communications go up and down completely randomly.
Pair Corralation between Satcom Systems and Allot Communications
Assuming the 90 days trading horizon Satcom Systems is expected to under-perform the Allot Communications. But the stock apears to be less risky and, when comparing its historical volatility, Satcom Systems is 2.71 times less risky than Allot Communications. The stock trades about -0.01 of its potential returns per unit of risk. The Allot Communications is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 126,400 in Allot Communications on September 1, 2024 and sell it today you would earn a total of 34,000 from holding Allot Communications or generate 26.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Satcom Systems vs. Allot Communications
Performance |
| Timeline |
| Satcom Systems |
| Allot Communications |
Satcom Systems and Allot Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Satcom Systems and Allot Communications
The main advantage of trading using opposite Satcom Systems and Allot Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Satcom Systems position performs unexpectedly, Allot Communications 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 Allot Communications will offset losses from the drop in Allot Communications' long position.| Satcom Systems vs. Azorim Investment Development | Satcom Systems vs. Blender Financial Technologies | Satcom Systems vs. IDI Insurance | Satcom Systems vs. Bank Leumi Le Israel |
| Allot Communications vs. Tower Semiconductor | Allot Communications vs. Nova | Allot Communications vs. Nice | Allot Communications vs. AudioCodes |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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