Correlation Between Gilat Satellite and Golden House

Can any of the company-specific risk be diversified away by investing in both Gilat Satellite and Golden House 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 Gilat Satellite and Golden House into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gilat Satellite Networks and Golden House, you can compare the effects of market volatilities on Gilat Satellite and Golden House 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 Gilat Satellite with a short position of Golden House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilat Satellite and Golden House.

Diversification Opportunities for Gilat Satellite and Golden House

-0.17

Correlation Coefficient

Gilat Satellite  Golden House

Good diversification

The 3 months correlation between Gilat and Golden is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Gilat Satellite Networks and Golden House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden House and Gilat Satellite 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 Gilat Satellite Networks are associated (or correlated) with Golden House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden House has no effect on the direction of Gilat Satellite i.e., Gilat Satellite and Golden House go up and down completely randomly.

Pair Corralation between Gilat Satellite and Golden House

Assuming the 90 days trading horizon Gilat Satellite Networks is expected to under-perform the Golden House. But the stock apears to be less risky and, when comparing its historical volatility, Gilat Satellite Networks is 1.8 times less risky than Golden House. The stock trades about -0.07 of its potential returns per unit of risk. The Golden House is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  132,082  in Golden House on February 6, 2024 and sell it today you would earn a total of  97,818  from holding Golden House or generate 74.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gilat Satellite Networks  vs.  Golden House

Gilat Satellite Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gilat Satellite Networks 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 June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Golden House

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden House are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Golden House sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gilat Satellite and Golden House

The main advantage of trading using opposite Gilat Satellite and Golden House positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gilat Satellite position performs unexpectedly, Golden House 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 Golden House will offset losses from the drop in Golden House's long position.

The idea behind Gilat Satellite Networks and Golden House 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.