Correlation Between Kafrit and Bezeq Israeli
Can any of the company-specific risk be diversified away by investing in both Kafrit and Bezeq Israeli 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 Kafrit and Bezeq Israeli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kafrit and Bezeq Israeli Telecommunication, you can compare the effects of market volatilities on Kafrit and Bezeq Israeli 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 Kafrit with a short position of Bezeq Israeli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kafrit and Bezeq Israeli.
Diversification Opportunities for Kafrit and Bezeq Israeli
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kafrit and Bezeq is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kafrit and Bezeq Israeli Telecommunicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bezeq Israeli Teleco and Kafrit 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 Kafrit are associated (or correlated) with Bezeq Israeli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bezeq Israeli Teleco has no effect on the direction of Kafrit i.e., Kafrit and Bezeq Israeli go up and down completely randomly.
Pair Corralation between Kafrit and Bezeq Israeli
Assuming the 90 days trading horizon Kafrit is expected to generate 5.3 times less return on investment than Bezeq Israeli. In addition to that, Kafrit is 1.65 times more volatile than Bezeq Israeli Telecommunication. It trades about 0.03 of its total potential returns per unit of risk. Bezeq Israeli Telecommunication is currently generating about 0.3 per unit of volatility. If you would invest 47,990 in Bezeq Israeli Telecommunication on September 1, 2024 and sell it today you would earn a total of 4,150 from holding Bezeq Israeli Telecommunication or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kafrit vs. Bezeq Israeli Telecommunicatio
Performance |
| Timeline |
| Kafrit |
| Bezeq Israeli Teleco |
Kafrit and Bezeq Israeli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kafrit and Bezeq Israeli
The main advantage of trading using opposite Kafrit and Bezeq Israeli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kafrit position performs unexpectedly, Bezeq Israeli 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 Bezeq Israeli will offset losses from the drop in Bezeq Israeli's long position.The idea behind Kafrit and Bezeq Israeli Telecommunication pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bezeq Israeli vs. Bank Leumi Le Israel | Bezeq Israeli vs. Teva Pharmaceutical Industries | Bezeq Israeli vs. Bank Hapoalim | Bezeq Israeli vs. Elbit Systems |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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