Correlation Between Brisa Bridgestone and Afyon Cimento

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

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

Diversification Opportunities for Brisa Bridgestone and Afyon Cimento

-0.12

Correlation Coefficient

Brisa Bridgestone  Afyon Cimento

Good diversification

The 3 months correlation between Brisa and Afyon is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Brisa Bridgestone Sabanci and Afyon Cimento Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afyon Cimento Sanayi and Brisa Bridgestone 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 Brisa Bridgestone Sabanci are associated (or correlated) with Afyon Cimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afyon Cimento Sanayi has no effect on the direction of Brisa Bridgestone i.e., Brisa Bridgestone and Afyon Cimento go up and down completely randomly.

Pair Corralation between Brisa Bridgestone and Afyon Cimento

Assuming the 90 days trading horizon Brisa Bridgestone is expected to generate 1.13 times less return on investment than Afyon Cimento. But when comparing it to its historical volatility, Brisa Bridgestone Sabanci is 1.22 times less risky than Afyon Cimento. It trades about 0.07 of its potential returns per unit of risk. Afyon Cimento Sanayi is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,434  in Afyon Cimento Sanayi on October 10, 2024 and sell it today you would earn a total of  119.00  from holding Afyon Cimento Sanayi or generate 8.3% return on investment over 90 days.

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

Brisa Bridgestone Sabanci  vs.  Afyon Cimento Sanayi

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 February 2025.

Afyon Cimento Sanayi

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Brisa Bridgestone and Afyon Cimento

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

The idea behind Brisa Bridgestone Sabanci and Afyon Cimento 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 Global Correlations module to find global opportunities by holding instruments from different markets.