Correlation Between Payment Financial and Bezeq Israeli

Can any of the company-specific risk be diversified away by investing in both Payment Financial and Bezeq Israeli 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 Payment Financial and Bezeq Israeli into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Payment Financial Technologies and Bezeq Israeli Telecommunication, you can compare the effects of market volatilities on Payment Financial and Bezeq Israeli 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 Payment Financial with a short position of Bezeq Israeli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payment Financial and Bezeq Israeli.

Diversification Opportunities for Payment Financial and Bezeq Israeli

0.76

Correlation Coefficient

Payment Financial  Bezeq Israeli

Poor diversification

The 3 months correlation between Payment and Bezeq is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Payment Financial Technologies and Bezeq Israeli Telecommunicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bezeq Israeli Teleco and Payment Financial 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 Payment Financial Technologies are associated (or correlated) with Bezeq Israeli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bezeq Israeli Teleco has no effect on the direction of Payment Financial i.e., Payment Financial and Bezeq Israeli go up and down completely randomly.

Pair Corralation between Payment Financial and Bezeq Israeli

Assuming the 90 days trading horizon Payment Financial is expected to generate 1.15 times less return on investment than Bezeq Israeli. In addition to that, Payment Financial is 2.44 times more volatile than Bezeq Israeli Telecommunication. It trades about 0.13 of its total potential returns per unit of risk. Bezeq Israeli Telecommunication is currently generating about 0.37 per unit of volatility. If you would invest  40,399  in Bezeq Israeli Telecommunication on September 16, 2024 and sell it today you would earn a total of  12,901  from holding Bezeq Israeli Telecommunication or generate 31.93% return on investment over 90 days.

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

Payment Financial Technologies  vs.  Bezeq Israeli Telecommunicatio

Payment Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Payment Financial Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Payment Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Bezeq Israeli Teleco

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bezeq Israeli Telecommunication are ranked lower than 29 (%) 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.

Pair Trading with Payment Financial and Bezeq Israeli

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

The idea behind Payment Financial Technologies and Bezeq Israeli Telecommunication 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..