Correlation Between Arcelik AS and Brisa Bridgestone

Can any of the company-specific risk be diversified away by investing in both Arcelik AS and Brisa Bridgestone 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 Arcelik AS and Brisa Bridgestone into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arcelik AS and Brisa Bridgestone Sabanci, you can compare the effects of market volatilities on Arcelik AS and Brisa Bridgestone 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 Arcelik AS with a short position of Brisa Bridgestone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcelik AS and Brisa Bridgestone.

Diversification Opportunities for Arcelik AS and Brisa Bridgestone

0.56

Correlation Coefficient

Arcelik AS  Brisa Bridgestone

Very weak diversification

The 3 months correlation between Arcelik and Brisa is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Arcelik AS and Brisa Bridgestone Sabanci in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brisa Bridgestone Sabanci and Arcelik AS 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 Arcelik AS are associated (or correlated) with Brisa Bridgestone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brisa Bridgestone Sabanci has no effect on the direction of Arcelik AS i.e., Arcelik AS and Brisa Bridgestone go up and down completely randomly.

Pair Corralation between Arcelik AS and Brisa Bridgestone

Assuming the 90 days trading horizon Arcelik AS is expected to generate 1.39 times less return on investment than Brisa Bridgestone. But when comparing it to its historical volatility, Arcelik AS is 1.1 times less risky than Brisa Bridgestone. It trades about 0.06 of its potential returns per unit of risk. Brisa Bridgestone Sabanci is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,785  in Brisa Bridgestone Sabanci on September 12, 2024 and sell it today you would earn a total of  805.00  from holding Brisa Bridgestone Sabanci or generate 9.16% return on investment over 90 days.

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

Arcelik AS  vs.  Brisa Bridgestone Sabanci

Arcelik AS

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arcelik AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Arcelik AS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brisa Bridgestone Sabanci

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brisa Bridgestone Sabanci are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Brisa Bridgestone may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Arcelik AS and Brisa Bridgestone

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

The idea behind Arcelik AS and Brisa Bridgestone Sabanci 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.