Correlation Between B Communications and Arena Star
Can any of the company-specific risk be diversified away by investing in both B Communications and Arena Star 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 B Communications and Arena Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Arena Star Group, you can compare the effects of market volatilities on B Communications and Arena Star 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 B Communications with a short position of Arena Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Arena Star.
Diversification Opportunities for B Communications and Arena Star
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BCOM and Arena is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Arena Star Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arena Star Group and B Communications 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 B Communications are associated (or correlated) with Arena Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arena Star Group has no effect on the direction of B Communications i.e., B Communications and Arena Star go up and down completely randomly.
Pair Corralation between B Communications and Arena Star
Assuming the 90 days trading horizon B Communications is expected to generate 1.01 times more return on investment than Arena Star. However, B Communications is 1.01 times more volatile than Arena Star Group. It trades about 0.05 of its potential returns per unit of risk. Arena Star Group is currently generating about 0.03 per unit of risk. If you would invest 143,400 in B Communications on September 12, 2024 and sell it today you would earn a total of 34,000 from holding B Communications or generate 23.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Communications vs. Arena Star Group
Performance |
| Timeline |
| B Communications |
| Arena Star Group |
B Communications and Arena Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Arena Star
The main advantage of trading using opposite B Communications and Arena Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Arena Star 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 Arena Star will offset losses from the drop in Arena Star's long position.| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Tower Semiconductor | B Communications vs. Israel Discount Bank | B Communications vs. Photomyne |
| Arena Star vs. Isras Investment | Arena Star vs. Sella Real Estate | Arena Star vs. Harel Insurance Investments | Arena Star vs. B Communications |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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