Correlation Between Bezeq Israeli and Malam Team

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

Diversification Opportunities for Bezeq Israeli and Malam Team

0.78

Correlation Coefficient

Bezeq Israeli  Malam Team

Poor diversification

The 3 months correlation between Bezeq and Malam is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Malam Team in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malam Team 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 Malam Team. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malam Team has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Malam Team go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Malam Team

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.7 times more return on investment than Malam Team. However, Bezeq Israeli Telecommunication is 1.43 times less risky than Malam Team. It trades about 0.07 of its potential returns per unit of risk. Malam Team is currently generating about -0.05 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.  Malam Team

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.

Malam Team

Risk-Adjusted Performance

Very Weak

Over the last 90 days Malam Team has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Bezeq Israeli and Malam Team

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

The idea behind Bezeq Israeli Telecommunication and Malam Team 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.