Correlation Between International Business and Turk Tuborg

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

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

Diversification Opportunities for International Business and Turk Tuborg

0.14

Correlation Coefficient

International Business  Turk Tuborg

Average diversification

The 3 months correlation between International and Turk is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine 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 International Business 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 International Business Machines 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 International Business i.e., International Business and Turk Tuborg go up and down completely randomly.

Pair Corralation between International Business and Turk Tuborg

Considering the 90-day investment horizon International Business is expected to generate 3.17 times less return on investment than Turk Tuborg. But when comparing it to its historical volatility, International Business Machines is 2.54 times less risky than Turk Tuborg. It trades about 0.09 of its potential returns per unit of risk. Turk Tuborg Bira is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,322  in Turk Tuborg Bira on October 4, 2024 and sell it today you would earn a total of  10,718  from holding Turk Tuborg Bira or generate 322.64% return on investment over 90 days.

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

International Business Machine  vs.  Turk Tuborg Bira

International Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Business Machines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, International Business is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Turk Tuborg Bira

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Turk Tuborg Bira are ranked lower than 5 (%) 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 February 2025.

Pair Trading with International Business and Turk Tuborg

The main advantage of trading using opposite International Business and Turk Tuborg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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 International Business Machines 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.