Correlation Between BIM Birlesik and Vestel Elektronik

Can any of the company-specific risk be diversified away by investing in both BIM Birlesik and Vestel Elektronik 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 BIM Birlesik and Vestel Elektronik into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BIM Birlesik Magazalar and Vestel Elektronik Sanayi, you can compare the effects of market volatilities on BIM Birlesik and Vestel Elektronik 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 BIM Birlesik with a short position of Vestel Elektronik. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIM Birlesik and Vestel Elektronik.

Diversification Opportunities for BIM Birlesik and Vestel Elektronik

0.58

Correlation Coefficient

BIM Birlesik  Vestel Elektronik

Very weak diversification

The 3 months correlation between BIM and Vestel is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding BIM Birlesik Magazalar and Vestel Elektronik Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestel Elektronik Sanayi and BIM Birlesik 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 BIM Birlesik Magazalar are associated (or correlated) with Vestel Elektronik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestel Elektronik Sanayi has no effect on the direction of BIM Birlesik i.e., BIM Birlesik and Vestel Elektronik go up and down completely randomly.

Pair Corralation between BIM Birlesik and Vestel Elektronik

Assuming the 90 days trading horizon BIM Birlesik is expected to generate 3.39 times less return on investment than Vestel Elektronik. But when comparing it to its historical volatility, BIM Birlesik Magazalar is 1.41 times less risky than Vestel Elektronik. It trades about 0.17 of its potential returns per unit of risk. Vestel Elektronik Sanayi is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  5,885  in Vestel Elektronik Sanayi on September 12, 2024 and sell it today you would earn a total of  1,585  from holding Vestel Elektronik Sanayi or generate 26.93% return on investment over 90 days.

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

BIM Birlesik Magazalar  vs.  Vestel Elektronik Sanayi

BIM Birlesik Magazalar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BIM Birlesik Magazalar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, BIM Birlesik is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Vestel Elektronik Sanayi

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vestel Elektronik Sanayi are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Vestel Elektronik demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BIM Birlesik and Vestel Elektronik

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

The idea behind BIM Birlesik Magazalar and Vestel Elektronik Sanayi 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.