Correlation Between Bezeq Israeli and Seach Medical

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

Diversification Opportunities for Bezeq Israeli and Seach Medical

0.6

Correlation Coefficient

Bezeq Israeli  Seach Medical

Poor diversification

The 3 months correlation between Bezeq and Seach is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Seach Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seach Medical Group 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 Seach Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seach Medical Group has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Seach Medical go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Seach Medical

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.5 times more return on investment than Seach Medical. However, Bezeq Israeli Telecommunication is 2.02 times less risky than Seach Medical. It trades about 0.05 of its potential returns per unit of risk. Seach Medical Group is currently generating about -0.06 per unit of risk. If you would invest  51,380  in Bezeq Israeli Telecommunication on December 27, 2024 and sell it today you would earn a total of  1,740  from holding Bezeq Israeli Telecommunication or generate 3.39% 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.  Seach Medical Group

Bezeq Israeli Teleco

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bezeq Israeli is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Seach Medical Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seach Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bezeq Israeli and Seach Medical

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

The idea behind Bezeq Israeli Telecommunication and Seach Medical Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.