Correlation Between Afcon Holdings and Bezeq Israeli

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Can any of the company-specific risk be diversified away by investing in both Afcon Holdings 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 Afcon Holdings and Bezeq Israeli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afcon Holdings and Bezeq Israeli Telecommunication, you can compare the effects of market volatilities on Afcon Holdings 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 Afcon Holdings with a short position of Bezeq Israeli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afcon Holdings and Bezeq Israeli.

Diversification Opportunities for Afcon Holdings and Bezeq Israeli

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Afcon and Bezeq is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Afcon Holdings 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 Afcon Holdings 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 Afcon Holdings 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 Afcon Holdings i.e., Afcon Holdings and Bezeq Israeli go up and down completely randomly.

Pair Corralation between Afcon Holdings and Bezeq Israeli

Assuming the 90 days trading horizon Afcon Holdings is expected to under-perform the Bezeq Israeli. In addition to that, Afcon Holdings is 1.47 times more volatile than Bezeq Israeli Telecommunication. It trades about -0.25 of its total potential returns per unit of risk. Bezeq Israeli Telecommunication is currently generating about -0.03 per unit of volatility. If you would invest  48,400  in Bezeq Israeli Telecommunication on December 29, 2023 and sell it today you would lose (200.00) from holding Bezeq Israeli Telecommunication or give up 0.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy94.44%
ValuesDaily Returns

Afcon Holdings  vs.  Bezeq Israeli Telecommunicatio

 Performance 
       Timeline  
Afcon Holdings 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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.

Afcon Holdings and Bezeq Israeli Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Afcon Holdings and Bezeq Israeli

The main advantage of trading using opposite Afcon Holdings and Bezeq Israeli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afcon Holdings 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 Afcon Holdings 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.
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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