Correlation Between B Communications and Holmes Place
Can any of the company-specific risk be diversified away by investing in both B Communications and Holmes Place 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 Holmes Place into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Holmes Place International, you can compare the effects of market volatilities on B Communications and Holmes Place 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 Holmes Place. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Holmes Place.
Diversification Opportunities for B Communications and Holmes Place
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BCOM and Holmes is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Holmes Place International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmes Place Interna 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 Holmes Place. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmes Place Interna has no effect on the direction of B Communications i.e., B Communications and Holmes Place go up and down completely randomly.
Pair Corralation between B Communications and Holmes Place
Assuming the 90 days trading horizon B Communications is expected to generate 1.4 times more return on investment than Holmes Place. However, B Communications is 1.4 times more volatile than Holmes Place International. It trades about 0.39 of its potential returns per unit of risk. Holmes Place International is currently generating about 0.2 per unit of risk. If you would invest 130,000 in B Communications on August 29, 2024 and sell it today you would earn a total of 38,100 from holding B Communications or generate 29.31% 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. Holmes Place International
Performance |
| Timeline |
| B Communications |
| Holmes Place Interna |
B Communications and Holmes Place Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Holmes Place
The main advantage of trading using opposite B Communications and Holmes Place positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Holmes Place 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 Holmes Place will offset losses from the drop in Holmes Place's long position.| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Tower Semiconductor | B Communications vs. Israel Discount Bank | B Communications vs. Holmes Place International |
| Holmes Place vs. Fattal 1998 Holdings | Holmes Place vs. Delek Group | Holmes Place vs. Bank Leumi Le Israel | Holmes Place vs. Matrix |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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