Correlation Between Birlik Mensucat and Brisa Bridgestone

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

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

Diversification Opportunities for Birlik Mensucat and Brisa Bridgestone

0.67

Correlation Coefficient

Birlik Mensucat  Brisa Bridgestone

Poor diversification

The 3 months correlation between Birlik and Brisa is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Birlik Mensucat Ticaret 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 Birlik Mensucat 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 Birlik Mensucat Ticaret 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 Birlik Mensucat i.e., Birlik Mensucat and Brisa Bridgestone go up and down completely randomly.

Pair Corralation between Birlik Mensucat and Brisa Bridgestone

Assuming the 90 days trading horizon Birlik Mensucat Ticaret is expected to under-perform the Brisa Bridgestone. In addition to that, Birlik Mensucat is 1.25 times more volatile than Brisa Bridgestone Sabanci. It trades about -0.03 of its total potential returns per unit of risk. Brisa Bridgestone Sabanci is currently generating about 0.0 per unit of volatility. If you would invest  8,600  in Brisa Bridgestone Sabanci on December 22, 2024 and sell it today you would lose (115.00) from holding Brisa Bridgestone Sabanci or give up 1.34% of portfolio value over 90 days.

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

Birlik Mensucat Ticaret  vs.  Brisa Bridgestone Sabanci

Birlik Mensucat Ticaret

Risk-Adjusted Performance

Very Weak

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

Brisa Bridgestone Sabanci

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Birlik Mensucat and Brisa Bridgestone

The main advantage of trading using opposite Birlik Mensucat and Brisa Bridgestone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birlik Mensucat 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 Birlik Mensucat Ticaret 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.