Correlation Between B Communications and Terminal X
Can any of the company-specific risk be diversified away by investing in both B Communications and Terminal X 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 Terminal X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Communications and Terminal X Online, you can compare the effects of market volatilities on B Communications and Terminal X 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 Terminal X. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Terminal X.
Diversification Opportunities for B Communications and Terminal X
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BCOM and Terminal is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Terminal X Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terminal X Online 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 Terminal X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terminal X Online has no effect on the direction of B Communications i.e., B Communications and Terminal X go up and down completely randomly.
Pair Corralation between B Communications and Terminal X
Assuming the 90 days trading horizon B Communications is expected to generate 2.17 times more return on investment than Terminal X. However, B Communications is 2.17 times more volatile than Terminal X Online. It trades about 0.4 of its potential returns per unit of risk. Terminal X Online is currently generating about 0.48 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Communications vs. Terminal X Online
Performance |
| Timeline |
| B Communications |
| Terminal X Online |
B Communications and Terminal X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Communications and Terminal X
The main advantage of trading using opposite B Communications and Terminal X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Communications position performs unexpectedly, Terminal X 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 Terminal X will offset losses from the drop in Terminal X's long position.| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Partner | B Communications vs. Cellcom Israel | B Communications vs. Tower Semiconductor |
| Terminal X vs. Fox Wizel | Terminal X vs. Retailors | Terminal X vs. Delek Group | Terminal X vs. Holmes Place International |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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