Correlation Between Bms Birlesik and Ihlas Holding

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

By analyzing existing cross correlation between Bms Birlesik Metal and Ihlas Holding AS, you can compare the effects of market volatilities on Bms Birlesik and Ihlas Holding 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 Bms Birlesik with a short position of Ihlas Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bms Birlesik and Ihlas Holding.

Diversification Opportunities for Bms Birlesik and Ihlas Holding

0.94

Correlation Coefficient

Bms Birlesik  Ihlas Holding

Almost no diversification

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

Pair Corralation between Bms Birlesik and Ihlas Holding

Assuming the 90 days trading horizon Bms Birlesik Metal is expected to generate 3.97 times more return on investment than Ihlas Holding. However, Bms Birlesik is 3.97 times more volatile than Ihlas Holding AS. It trades about 0.05 of its potential returns per unit of risk. Ihlas Holding AS is currently generating about 0.08 per unit of risk. If you would invest  1,007  in Bms Birlesik Metal on September 23, 2024 and sell it today you would earn a total of  1,813  from holding Bms Birlesik Metal or generate 180.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.2%
Values	Daily Returns

Bms Birlesik Metal  vs.  Ihlas Holding AS

Bms Birlesik Metal

Risk-Adjusted Performance

10 of 100

OK

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

Ihlas Holding AS

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ihlas Holding AS are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Ihlas Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bms Birlesik and Ihlas Holding

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

The idea behind Bms Birlesik Metal and Ihlas Holding AS 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.