Correlation Between Bezeq Israeli and Sofwave Medical

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

Diversification Opportunities for Bezeq Israeli and Sofwave Medical

-0.4

Correlation Coefficient

Bezeq Israeli  Sofwave Medical

Very good diversification

The 3 months correlation between Bezeq and Sofwave is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and Sofwave Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sofwave Medical 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 Sofwave Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sofwave Medical has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and Sofwave Medical go up and down completely randomly.

Pair Corralation between Bezeq Israeli and Sofwave Medical

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 0.6 times more return on investment than Sofwave Medical. However, Bezeq Israeli Telecommunication is 1.67 times less risky than Sofwave Medical. It trades about 0.31 of its potential returns per unit of risk. Sofwave Medical is currently generating about -0.16 per unit of risk. If you would invest  43,350  in Bezeq Israeli Telecommunication on October 12, 2024 and sell it today you would earn a total of  11,740  from holding Bezeq Israeli Telecommunication or generate 27.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bezeq Israeli Telecommunicatio  vs.  Sofwave Medical

Bezeq Israeli Teleco

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 24 (%) 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.

Sofwave Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofwave Medical 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bezeq Israeli and Sofwave Medical

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

The idea behind Bezeq Israeli Telecommunication and Sofwave Medical 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.