Correlation Between Gubre Fabrikalari and Turk Tuborg

Can any of the company-specific risk be diversified away by investing in both Gubre Fabrikalari and Turk Tuborg 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 Gubre Fabrikalari and Turk Tuborg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gubre Fabrikalari TAS and Turk Tuborg Bira, you can compare the effects of market volatilities on Gubre Fabrikalari and Turk Tuborg 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 Gubre Fabrikalari with a short position of Turk Tuborg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gubre Fabrikalari and Turk Tuborg.

Diversification Opportunities for Gubre Fabrikalari and Turk Tuborg

0.8

Correlation Coefficient

Gubre Fabrikalari  Turk Tuborg

Very poor diversification

The 3 months correlation between Gubre and Turk is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Gubre Fabrikalari TAS and Turk Tuborg Bira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turk Tuborg Bira and Gubre Fabrikalari 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 Gubre Fabrikalari TAS are associated (or correlated) with Turk Tuborg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turk Tuborg Bira has no effect on the direction of Gubre Fabrikalari i.e., Gubre Fabrikalari and Turk Tuborg go up and down completely randomly.

Pair Corralation between Gubre Fabrikalari and Turk Tuborg

Assuming the 90 days trading horizon Gubre Fabrikalari TAS is expected to generate 0.52 times more return on investment than Turk Tuborg. However, Gubre Fabrikalari TAS is 1.93 times less risky than Turk Tuborg. It trades about 0.62 of its potential returns per unit of risk. Turk Tuborg Bira is currently generating about 0.1 per unit of risk. If you would invest  22,250  in Gubre Fabrikalari TAS on September 25, 2024 and sell it today you would earn a total of  5,625  from holding Gubre Fabrikalari TAS or generate 25.28% return on investment over 90 days.

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

Gubre Fabrikalari TAS  vs.  Turk Tuborg Bira

Gubre Fabrikalari TAS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gubre Fabrikalari TAS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Gubre Fabrikalari demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Turk Tuborg Bira

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Turk Tuborg Bira are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Turk Tuborg may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gubre Fabrikalari and Turk Tuborg

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

The idea behind Gubre Fabrikalari TAS and Turk Tuborg Bira 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.