Correlation Between B Communications and Intercure

Can any of the company-specific risk be diversified away by investing in both B Communications and Intercure 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 B Communications and Intercure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between B Communications and Intercure, you can compare the effects of market volatilities on B Communications and Intercure 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 B Communications with a short position of Intercure. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Communications and Intercure.

Diversification Opportunities for B Communications and Intercure

0.45

Correlation Coefficient

B Communications  Intercure

Very weak diversification

The 3 months correlation between BCOM and Intercure is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding B Communications and Intercure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercure and B Communications 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 B Communications are associated (or correlated) with Intercure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercure has no effect on the direction of B Communications i.e., B Communications and Intercure go up and down completely randomly.

Pair Corralation between B Communications and Intercure

Assuming the 90 days trading horizon B Communications is expected to generate 0.98 times more return on investment than Intercure. However, B Communications is 1.02 times less risky than Intercure. It trades about 0.11 of its potential returns per unit of risk. Intercure is currently generating about -0.03 per unit of risk. If you would invest  166,800  in B Communications on December 30, 2024 and sell it today you would earn a total of  24,400  from holding B Communications or generate 14.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

B Communications  vs.  Intercure

B Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in B Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, B Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Intercure

Risk-Adjusted Performance

Very Weak

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

Pair Trading with B Communications and Intercure

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

The idea behind B Communications and Intercure 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.