Correlation Between B Communications and Nextcom
Can any of the company-specific risk be diversified away by investing in both B Communications and Nextcom 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 Nextcom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Nextcom, you can compare the effects of market volatilities on B Communications and Nextcom 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 Nextcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Nextcom.
Diversification Opportunities for B Communications and Nextcom
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between BCOM and Nextcom is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Nextcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextcom 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 Nextcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextcom has no effect on the direction of B Communications i.e., B Communications and Nextcom go up and down completely randomly.
Pair Corralation between B Communications and Nextcom
Assuming the 90 days trading horizon B Communications is expected to generate 0.85 times more return on investment than Nextcom. However, B Communications is 1.18 times less risky than Nextcom. It trades about 0.26 of its potential returns per unit of risk. Nextcom is currently generating about 0.12 per unit of risk. If you would invest 159,200 in B Communications on September 15, 2024 and sell it today you would earn a total of 17,900 from holding B Communications or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Communications vs. Nextcom
Performance |
| Timeline |
| B Communications |
| Nextcom |
B Communications and Nextcom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Nextcom
The main advantage of trading using opposite B Communications and Nextcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Nextcom 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 Nextcom will offset losses from the drop in Nextcom's long position.| B Communications vs. Tower Semiconductor | B Communications vs. Israel Discount Bank | B Communications vs. Photomyne | B Communications vs. M Yochananof and |
| Nextcom vs. Tower Semiconductor | Nextcom vs. Israel Discount Bank | Nextcom vs. B Communications | Nextcom vs. Photomyne |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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