Correlation Between Bezeq Israeli and B Gaon

Can any of the company-specific risk be diversified away by investing in both Bezeq Israeli and B Gaon 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 B Gaon 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 B Gaon Holdings, you can compare the effects of market volatilities on Bezeq Israeli and B Gaon 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 B Gaon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bezeq Israeli and B Gaon.

Diversification Opportunities for Bezeq Israeli and B Gaon

-0.15

Correlation Coefficient

Bezeq Israeli  B Gaon

Good diversification

The 3 months correlation between Bezeq and GAON is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and B Gaon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Gaon Holdings 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 B Gaon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Gaon Holdings has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and B Gaon go up and down completely randomly.

Pair Corralation between Bezeq Israeli and B Gaon

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.73 times more return on investment than B Gaon. However, Bezeq Israeli Telecommunication is 1.36 times less risky than B Gaon. It trades about -0.07 of its potential returns per unit of risk. B Gaon Holdings is currently generating about -0.14 per unit of risk. If you would invest  46,915  in Bezeq Israeli Telecommunication on February 16, 2024 and sell it today you would lose (1,655) from holding Bezeq Israeli Telecommunication or give up 3.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Bezeq Israeli Telecommunicatio  vs.  B Gaon Holdings

Bezeq Israeli Teleco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bezeq Israeli Telecommunication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bezeq Israeli is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

B Gaon Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B Gaon Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Bezeq Israeli and B Gaon

The main advantage of trading using opposite Bezeq Israeli and B Gaon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bezeq Israeli position performs unexpectedly, B Gaon 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 Gaon will offset losses from the drop in B Gaon's long position.

The idea behind Bezeq Israeli Telecommunication and B Gaon Holdings 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.