Correlation Between B Communications and Global Knafaim
Can any of the company-specific risk be diversified away by investing in both B Communications and Global Knafaim 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 Global Knafaim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Global Knafaim Leasing, you can compare the effects of market volatilities on B Communications and Global Knafaim 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 Global Knafaim. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Global Knafaim.
Diversification Opportunities for B Communications and Global Knafaim
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BCOM and Global is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Global Knafaim Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Knafaim Leasing 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 Global Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Knafaim Leasing has no effect on the direction of B Communications i.e., B Communications and Global Knafaim go up and down completely randomly.
Pair Corralation between B Communications and Global Knafaim
Assuming the 90 days trading horizon B Communications is expected to generate 1.2 times more return on investment than Global Knafaim. However, B Communications is 1.2 times more volatile than Global Knafaim Leasing. It trades about 0.07 of its potential returns per unit of risk. Global Knafaim Leasing is currently generating about 0.05 per unit of risk. If you would invest 110,000 in B Communications on September 2, 2024 and sell it today you would earn a total of 57,000 from holding B Communications or generate 51.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Communications vs. Global Knafaim Leasing
Performance |
| Timeline |
| B Communications |
| Global Knafaim Leasing |
B Communications and Global Knafaim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Global Knafaim
The main advantage of trading using opposite B Communications and Global Knafaim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Global Knafaim 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 Global Knafaim will offset losses from the drop in Global Knafaim's long position.| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Partner | B Communications vs. Cellcom Israel | B Communications vs. Tower Semiconductor |
| Global Knafaim vs. Arad | Global Knafaim vs. Alony Hetz Properties | Global Knafaim vs. Airport City | Global Knafaim vs. Harel Insurance Investments |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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