Correlation Between Bezeq Israeli and Alony Hetz

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

Diversification Opportunities for Bezeq Israeli and Alony Hetz

0.82

Correlation Coefficient

Bezeq Israeli  Alony Hetz

Very poor diversification

The 3 months correlation between Bezeq and Alony is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Alony Hetz Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alony Hetz Properties 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 Alony Hetz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alony Hetz Properties has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Alony Hetz go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Alony Hetz

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.57 times more return on investment than Alony Hetz. However, Bezeq Israeli Telecommunication is 1.75 times less risky than Alony Hetz. It trades about 0.19 of its potential returns per unit of risk. Alony Hetz Properties is currently generating about 0.1 per unit of risk. If you would invest  52,240  in Bezeq Israeli Telecommunication on December 2, 2024 and sell it today you would earn a total of  7,370  from holding Bezeq Israeli Telecommunication or generate 14.11% return on investment over 90 days.

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

Bezeq Israeli Telecommunicatio  vs.  Alony Hetz Properties

Bezeq Israeli Teleco

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 14 (%) 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.

Alony Hetz Properties

Risk-Adjusted Performance

OK

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

Pair Trading with Bezeq Israeli and Alony Hetz

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

The idea behind Bezeq Israeli Telecommunication and Alony Hetz Properties 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.