Correlation Between B Communications and Scope Metals
Can any of the company-specific risk be diversified away by investing in both B Communications and Scope Metals 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 Scope Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Scope Metals Group, you can compare the effects of market volatilities on B Communications and Scope Metals 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 Scope Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Scope Metals.
Diversification Opportunities for B Communications and Scope Metals
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BCOM and Scope is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Scope Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scope Metals 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 Scope Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scope Metals Group has no effect on the direction of B Communications i.e., B Communications and Scope Metals go up and down completely randomly.
Pair Corralation between B Communications and Scope Metals
Assuming the 90 days trading horizon B Communications is expected to under-perform the Scope Metals. But the stock apears to be less risky and, when comparing its historical volatility, B Communications is 1.2 times less risky than Scope Metals. The stock trades about -0.34 of its potential returns per unit of risk. The Scope Metals Group is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 1,521,000 in Scope Metals Group on December 9, 2024 and sell it today you would lose (64,000) from holding Scope Metals Group or give up 4.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Communications vs. Scope Metals Group
Performance |
| Timeline |
| B Communications |
| Scope Metals Group |
B Communications and Scope Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Scope Metals
The main advantage of trading using opposite B Communications and Scope Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Scope Metals 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 Scope Metals will offset losses from the drop in Scope Metals' long position.| B Communications vs. Bezeq Israeli Telecommunication | ||
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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