Correlation Between Bursa Cimento and Gentas Genel

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

By analyzing existing cross correlation between Bursa Cimento Fabrikasi and Gentas Genel Metal, you can compare the effects of market volatilities on Bursa Cimento and Gentas Genel 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 Bursa Cimento with a short position of Gentas Genel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bursa Cimento and Gentas Genel.

Diversification Opportunities for Bursa Cimento and Gentas Genel

0.84

Correlation Coefficient

Bursa Cimento  Gentas Genel

Very poor diversification

The 3 months correlation between Bursa and Gentas is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bursa Cimento Fabrikasi and Gentas Genel Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentas Genel Metal and Bursa Cimento 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 Bursa Cimento Fabrikasi are associated (or correlated) with Gentas Genel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentas Genel Metal has no effect on the direction of Bursa Cimento i.e., Bursa Cimento and Gentas Genel go up and down completely randomly.

Pair Corralation between Bursa Cimento and Gentas Genel

Assuming the 90 days trading horizon Bursa Cimento is expected to generate 3.28 times less return on investment than Gentas Genel. But when comparing it to its historical volatility, Bursa Cimento Fabrikasi is 1.76 times less risky than Gentas Genel. It trades about 0.13 of its potential returns per unit of risk. Gentas Genel Metal is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  948.00  in Gentas Genel Metal on October 14, 2024 and sell it today you would earn a total of  169.00  from holding Gentas Genel Metal or generate 17.83% return on investment over 90 days.

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

Bursa Cimento Fabrikasi  vs.  Gentas Genel Metal

Bursa Cimento Fabrikasi

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bursa Cimento Fabrikasi are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Bursa Cimento demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Gentas Genel Metal

Risk-Adjusted Performance

25 of 100

Solid

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

Pair Trading with Bursa Cimento and Gentas Genel

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

The idea behind Bursa Cimento Fabrikasi and Gentas Genel Metal 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.