Correlation Between B Communications and GODM Investments
Can any of the company-specific risk be diversified away by investing in both B Communications and GODM Investments 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 GODM Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and GODM Investments, you can compare the effects of market volatilities on B Communications and GODM Investments 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 GODM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and GODM Investments.
Diversification Opportunities for B Communications and GODM Investments
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BCOM and GODM is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and GODM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GODM Investments 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 GODM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GODM Investments has no effect on the direction of B Communications i.e., B Communications and GODM Investments go up and down completely randomly.
Pair Corralation between B Communications and GODM Investments
Assuming the 90 days trading horizon B Communications is expected to generate 0.79 times more return on investment than GODM Investments. However, B Communications is 1.27 times less risky than GODM Investments. It trades about 0.14 of its potential returns per unit of risk. GODM Investments is currently generating about -0.31 per unit of risk. If you would invest 168,800 in B Communications on September 18, 2024 and sell it today you would earn a total of 8,100 from holding B Communications or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Communications vs. GODM Investments
Performance |
| Timeline |
| B Communications |
| GODM Investments |
B Communications and GODM Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and GODM Investments
The main advantage of trading using opposite B Communications and GODM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, GODM Investments 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 GODM Investments will offset losses from the drop in GODM Investments' long position.| B Communications vs. Tower Semiconductor | B Communications vs. Israel Discount Bank | B Communications vs. Photomyne | B Communications vs. M Yochananof and |
| GODM Investments vs. Rapac Communication Infrastructure | GODM Investments vs. B Communications | GODM Investments vs. Automatic Bank Services | GODM Investments vs. Willy Food |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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