Correlation Between Bezeq Israeli and Orbit Technologies

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

Diversification Opportunities for Bezeq Israeli and Orbit Technologies

0.46

Correlation Coefficient

Bezeq Israeli  Orbit Technologies

Very weak diversification

The 3 months correlation between Bezeq and Orbit is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Orbit Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbit Technologies 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 Orbit Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbit Technologies has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Orbit Technologies go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Orbit Technologies

Assuming the 90 days trading horizon Bezeq Israeli is expected to generate 1.73 times less return on investment than Orbit Technologies. But when comparing it to its historical volatility, Bezeq Israeli Telecommunication is 1.22 times less risky than Orbit Technologies. It trades about 0.07 of its potential returns per unit of risk. Orbit Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  291,000  in Orbit Technologies on December 30, 2024 and sell it today you would earn a total of  32,000  from holding Orbit Technologies or generate 11.0% 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.  Orbit Technologies

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.

Orbit Technologies

Risk-Adjusted Performance

OK

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

Pair Trading with Bezeq Israeli and Orbit Technologies

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

The idea behind Bezeq Israeli Telecommunication and Orbit Technologies 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.