Correlation Between Bezeq Israeli and Compugen

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

Diversification Opportunities for Bezeq Israeli and Compugen

0.7

Correlation Coefficient

Bezeq Israeli  Compugen

Poor diversification

The 3 months correlation between Bezeq and Compugen is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Compugen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugen 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 Compugen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compugen has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Compugen go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Compugen

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.35 times more return on investment than Compugen. However, Bezeq Israeli Telecommunication is 2.86 times less risky than Compugen. It trades about 0.07 of its potential returns per unit of risk. Compugen is currently generating about 0.02 per unit of risk. If you would invest  51,380  in Bezeq Israeli Telecommunication on December 30, 2024 and sell it today you would earn a total of  3,120  from holding Bezeq Israeli Telecommunication or generate 6.07% return on investment over 90 days.

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

Bezeq Israeli Telecommunicatio  vs.  Compugen

Bezeq Israeli Teleco

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bezeq Israeli may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Compugen

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compugen are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Compugen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bezeq Israeli and Compugen

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

The idea behind Bezeq Israeli Telecommunication and Compugen 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.