Correlation Between Bezeq Israeli and KSM Mutual

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

Diversification Opportunities for Bezeq Israeli and KSM Mutual

0.94

Correlation Coefficient

Bezeq Israeli  KSM Mutual

Almost no diversification

The 3 months correlation between Bezeq and KSM is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bezeq Israeli Telecommunicatio and KSM Mutual Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSM Mutual Funds 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 KSM Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSM Mutual Funds has no effect on the direction of Bezeq Israeli i.e., Bezeq Israeli and KSM Mutual go up and down completely randomly.

Pair Corralation between Bezeq Israeli and KSM Mutual

Assuming the 90 days trading horizon Bezeq Israeli Telecommunication is expected to generate 1.34 times more return on investment than KSM Mutual. However, Bezeq Israeli is 1.34 times more volatile than KSM Mutual Funds. It trades about 0.29 of its potential returns per unit of risk. KSM Mutual Funds is currently generating about 0.31 per unit of risk. If you would invest  49,600  in Bezeq Israeli Telecommunication on September 12, 2024 and sell it today you would earn a total of  4,530  from holding Bezeq Israeli Telecommunication or generate 9.13% return on investment over 90 days.

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

Bezeq Israeli Telecommunicatio  vs.  KSM Mutual Funds

Bezeq Israeli Teleco

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 28 (%) 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.

KSM Mutual Funds

Risk-Adjusted Performance

36 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in KSM Mutual Funds are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, KSM Mutual sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bezeq Israeli and KSM Mutual

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

The idea behind Bezeq Israeli Telecommunication and KSM Mutual Funds 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.