Correlation Between GEK TERNA and Bioter SA

Can any of the company-specific risk be diversified away by investing in both GEK TERNA and Bioter SA 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 GEK TERNA and Bioter SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GEK TERNA Holdings and Bioter SA, you can compare the effects of market volatilities on GEK TERNA and Bioter SA 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 GEK TERNA with a short position of Bioter SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEK TERNA and Bioter SA.

Diversification Opportunities for GEK TERNA and Bioter SA

-0.07

Correlation Coefficient

GEK TERNA  Bioter SA

Good diversification

The 3 months correlation between GEK and Bioter is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding GEK TERNA Holdings and Bioter SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioter SA and GEK TERNA 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 GEK TERNA Holdings are associated (or correlated) with Bioter SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioter SA has no effect on the direction of GEK TERNA i.e., GEK TERNA and Bioter SA go up and down completely randomly.

Pair Corralation between GEK TERNA and Bioter SA

Assuming the 90 days trading horizon GEK TERNA Holdings is expected to generate 0.41 times more return on investment than Bioter SA. However, GEK TERNA Holdings is 2.45 times less risky than Bioter SA. It trades about 0.28 of its potential returns per unit of risk. Bioter SA is currently generating about -0.06 per unit of risk. If you would invest  1,744  in GEK TERNA Holdings on September 15, 2024 and sell it today you would earn a total of  110.00  from holding GEK TERNA Holdings or generate 6.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

GEK TERNA Holdings  vs.  Bioter SA

GEK TERNA Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GEK TERNA Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, GEK TERNA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bioter SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bioter SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bioter SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEK TERNA and Bioter SA

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

The idea behind GEK TERNA Holdings and Bioter SA 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..