Correlation Between GSD Holding and Borlease Otomotiv

Can any of the company-specific risk be diversified away by investing in both GSD Holding and Borlease Otomotiv 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 GSD Holding and Borlease Otomotiv into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GSD Holding AS and Borlease Otomotiv AS, you can compare the effects of market volatilities on GSD Holding and Borlease Otomotiv 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 GSD Holding with a short position of Borlease Otomotiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of GSD Holding and Borlease Otomotiv.

Diversification Opportunities for GSD Holding and Borlease Otomotiv

0.72

Correlation Coefficient

GSD Holding  Borlease Otomotiv

Poor diversification

The 3 months correlation between GSD and Borlease is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding GSD Holding AS and Borlease Otomotiv AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borlease Otomotiv and GSD Holding 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 GSD Holding AS are associated (or correlated) with Borlease Otomotiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borlease Otomotiv has no effect on the direction of GSD Holding i.e., GSD Holding and Borlease Otomotiv go up and down completely randomly.

Pair Corralation between GSD Holding and Borlease Otomotiv

Assuming the 90 days trading horizon GSD Holding is expected to generate 4.95 times less return on investment than Borlease Otomotiv. But when comparing it to its historical volatility, GSD Holding AS is 1.14 times less risky than Borlease Otomotiv. It trades about 0.02 of its potential returns per unit of risk. Borlease Otomotiv AS is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,732  in Borlease Otomotiv AS on October 4, 2024 and sell it today you would earn a total of  4,108  from holding Borlease Otomotiv AS or generate 150.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	61.21%
Values	Daily Returns

GSD Holding AS  vs.  Borlease Otomotiv AS

GSD Holding AS

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GSD Holding AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, GSD Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Borlease Otomotiv

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Borlease Otomotiv AS are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Borlease Otomotiv demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GSD Holding and Borlease Otomotiv

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

The idea behind GSD Holding AS and Borlease Otomotiv AS 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.