Correlation Between Bezeq Israeli and Satcom Systems
Can any of the company-specific risk be diversified away by investing in both Bezeq Israeli and Satcom Systems 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 Bezeq Israeli and Satcom Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bezeq Israeli Telecommunication and Satcom Systems, you can compare the effects of market volatilities on Bezeq Israeli and Satcom Systems 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 Bezeq Israeli with a short position of Satcom Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bezeq Israeli and Satcom Systems.
Diversification Opportunities for Bezeq Israeli and Satcom Systems
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bezeq and Satcom is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Satcom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satcom Systems and Bezeq Israeli 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 Bezeq Israeli Telecommunication are associated (or correlated) with Satcom Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satcom Systems has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Satcom Systems go up and down completely randomly.
Pair Corralation between Bezeq Israeli and Satcom Systems
Assuming the 90 days trading horizon Bezeq Israeli is expected to generate 10.07 times less return on investment than Satcom Systems. But when comparing it to its historical volatility, Bezeq Israeli Telecommunication is 2.77 times less risky than Satcom Systems. It trades about 0.02 of its potential returns per unit of risk. Satcom Systems is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,990 in Satcom Systems on August 27, 2024 and sell it today you would earn a total of 3,490 from holding Satcom Systems or generate 116.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bezeq Israeli Telecommunicatio vs. Satcom Systems
Performance |
| Timeline |
| Bezeq Israeli Teleco |
| Satcom Systems |
Bezeq Israeli and Satcom Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bezeq Israeli and Satcom Systems
The main advantage of trading using opposite Bezeq Israeli and Satcom Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bezeq Israeli position performs unexpectedly, Satcom Systems 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 Satcom Systems will offset losses from the drop in Satcom Systems' long position.| Bezeq Israeli vs. Bank Leumi Le Israel | Bezeq Israeli vs. Teva Pharmaceutical Industries | Bezeq Israeli vs. Bank Hapoalim | Bezeq Israeli vs. Elbit Systems |
| Satcom Systems vs. B Communications | Satcom Systems vs. Bezeq Israeli Telecommunication | Satcom Systems vs. Terminal X Online | Satcom Systems vs. Altshuler Shaham Financial |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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