Correlation Between B Communications and Sofwave Medical
Can any of the company-specific risk be diversified away by investing in both B Communications and Sofwave Medical 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 Sofwave Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Sofwave Medical, you can compare the effects of market volatilities on B Communications and Sofwave Medical 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 Sofwave Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Sofwave Medical.
Diversification Opportunities for B Communications and Sofwave Medical
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between BCOM and Sofwave is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Sofwave Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sofwave Medical 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 Sofwave Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sofwave Medical has no effect on the direction of B Communications i.e., B Communications and Sofwave Medical go up and down completely randomly.
Pair Corralation between B Communications and Sofwave Medical
Assuming the 90 days trading horizon B Communications is expected to generate 0.67 times more return on investment than Sofwave Medical. However, B Communications is 1.5 times less risky than Sofwave Medical. It trades about 0.14 of its potential returns per unit of risk. Sofwave Medical is currently generating about 0.03 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 | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
B Communications vs. Sofwave Medical
Performance |
| Timeline |
| B Communications |
| Sofwave Medical |
B Communications and Sofwave Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Sofwave Medical
The main advantage of trading using opposite B Communications and Sofwave Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Sofwave Medical 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 Sofwave Medical will offset losses from the drop in Sofwave Medical's long position.| B Communications vs. Tower Semiconductor | B Communications vs. Israel Discount Bank | B Communications vs. Photomyne | B Communications vs. M Yochananof and |
| Sofwave Medical vs. Harel Insurance Investments | Sofwave Medical vs. Shagrir Group Vehicle | Sofwave Medical vs. Rapac Communication Infrastructure | Sofwave Medical vs. Batm Advanced Communications |
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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