Correlation Between Bezeq Israeli and Axilion Smart

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

Diversification Opportunities for Bezeq Israeli and Axilion Smart

0.41

Correlation Coefficient

Bezeq Israeli  Axilion Smart

Very weak diversification

The 3 months correlation between Bezeq and Axilion is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Axilion Smart Mobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axilion Smart Mobility 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 Axilion Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axilion Smart Mobility has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Axilion Smart go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Axilion Smart

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to under-perform the Axilion Smart. But the stock apears to be less risky and, when comparing its historical volatility, Bezeq Israeli Telecommunication is 3.77 times less risky than Axilion Smart. The stock trades about -0.08 of its potential returns per unit of risk. The Axilion Smart Mobility is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,840  in Axilion Smart Mobility on October 8, 2024 and sell it today you would earn a total of  70.00  from holding Axilion Smart Mobility or generate 1.45% return on investment over 90 days.

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

Bezeq Israeli Telecommunicatio  vs.  Axilion Smart Mobility

Bezeq Israeli Teleco

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bezeq Israeli sustained solid returns over the last few months and may actually be approaching a breakup point.

Axilion Smart Mobility

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Axilion Smart Mobility are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Axilion Smart sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bezeq Israeli and Axilion Smart

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

The idea behind Bezeq Israeli Telecommunication and Axilion Smart Mobility 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.