Correlation Between Gilat Satellite and EMCORE

Can any of the company-specific risk be diversified away by investing in both Gilat Satellite and EMCORE 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 EMCORE 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 EMCORE, you can compare the effects of market volatilities on Gilat Satellite and EMCORE 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 EMCORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilat Satellite and EMCORE.

Diversification Opportunities for Gilat Satellite and EMCORE

0.67

Correlation Coefficient

Gilat Satellite  EMCORE

Poor diversification

The 3 months correlation between Gilat and EMCORE is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Gilat Satellite Networks and EMCORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCORE 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 EMCORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCORE has no effect on the direction of Gilat Satellite i.e., Gilat Satellite and EMCORE go up and down completely randomly.

Pair Corralation between Gilat Satellite and EMCORE

Given the investment horizon of 90 days Gilat Satellite Networks is expected to generate 0.44 times more return on investment than EMCORE. However, Gilat Satellite Networks is 2.28 times less risky than EMCORE. It trades about -0.01 of its potential returns per unit of risk. EMCORE is currently generating about -0.07 per unit of risk. If you would invest  682.00  in Gilat Satellite Networks on February 5, 2024 and sell it today you would lose (135.00) from holding Gilat Satellite Networks or give up 19.79% of portfolio value over 90 days.

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

Gilat Satellite Networks  vs.  EMCORE

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. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

EMCORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMCORE has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Gilat Satellite and EMCORE

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

The idea behind Gilat Satellite Networks and EMCORE 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.