Correlation Between Computer Direct and B Communications
Can any of the company-specific risk be diversified away by investing in both Computer Direct and B Communications 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 Computer Direct and B Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computer Direct and B Communications, you can compare the effects of market volatilities on Computer Direct and B Communications 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 Computer Direct with a short position of B Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Direct and B Communications.
Diversification Opportunities for Computer Direct and B Communications
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Computer and BCOM is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Computer Direct and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications and Computer Direct 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 Computer Direct are associated (or correlated) with B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Computer Direct i.e., Computer Direct and B Communications go up and down completely randomly.
Pair Corralation between Computer Direct and B Communications
Assuming the 90 days trading horizon Computer Direct is expected to generate 0.75 times more return on investment than B Communications. However, Computer Direct is 1.34 times less risky than B Communications. It trades about 0.22 of its potential returns per unit of risk. B Communications is currently generating about 0.12 per unit of risk. If you would invest 2,413,298 in Computer Direct on August 29, 2024 and sell it today you would earn a total of 1,128,702 from holding Computer Direct or generate 46.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Computer Direct vs. B Communications
Performance |
| Timeline |
| Computer Direct |
| B Communications |
Computer Direct and B Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computer Direct and B Communications
The main advantage of trading using opposite Computer Direct and B Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Direct position performs unexpectedly, B Communications 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 B Communications will offset losses from the drop in B Communications' long position.| Computer Direct vs. Matrix | Computer Direct vs. Hilan | Computer Direct vs. One Software Technologies | Computer Direct vs. Atreyu Capital Markets |
| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Partner | B Communications vs. Cellcom Israel | B Communications vs. Tower Semiconductor |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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