Correlation Between Brisa Bridgestone and DO AG

Can any of the company-specific risk be diversified away by investing in both Brisa Bridgestone and DO AG 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 DO AG 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 DO AG, you can compare the effects of market volatilities on Brisa Bridgestone and DO AG 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 DO AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brisa Bridgestone and DO AG.

Diversification Opportunities for Brisa Bridgestone and DO AG

0.57

Correlation Coefficient

Brisa Bridgestone  DO AG

Very weak diversification

The 3 months correlation between Brisa and DOCO is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Brisa Bridgestone Sabanci and DO AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DO AG 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 DO AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DO AG has no effect on the direction of Brisa Bridgestone i.e., Brisa Bridgestone and DO AG go up and down completely randomly.

Pair Corralation between Brisa Bridgestone and DO AG

Assuming the 90 days trading horizon Brisa Bridgestone is expected to generate 4.31 times less return on investment than DO AG. But when comparing it to its historical volatility, Brisa Bridgestone Sabanci is 1.22 times less risky than DO AG. It trades about 0.06 of its potential returns per unit of risk. DO AG is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  563,000  in DO AG on September 15, 2024 and sell it today you would earn a total of  64,000  from holding DO AG or generate 11.37% return on investment over 90 days.

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

Brisa Bridgestone Sabanci  vs.  DO AG

Brisa Bridgestone Sabanci

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brisa Bridgestone Sabanci are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Brisa Bridgestone is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

DO AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DO AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, DO AG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brisa Bridgestone and DO AG

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

The idea behind Brisa Bridgestone Sabanci and DO AG 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.