Correlation Between Penguen Gida and BINHO

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

By analyzing existing cross correlation between Penguen Gida Sanayi and BINHO, you can compare the effects of market volatilities on Penguen Gida and BINHO 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 Penguen Gida with a short position of BINHO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penguen Gida and BINHO.

Diversification Opportunities for Penguen Gida and BINHO

0.59

Correlation Coefficient

Penguen Gida  BINHO

Very weak diversification

The 3 months correlation between Penguen and BINHO is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Penguen Gida Sanayi and BINHO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BINHO and Penguen Gida 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 Penguen Gida Sanayi are associated (or correlated) with BINHO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BINHO has no effect on the direction of Penguen Gida i.e., Penguen Gida and BINHO go up and down completely randomly.

Pair Corralation between Penguen Gida and BINHO

Assuming the 90 days trading horizon Penguen Gida Sanayi is expected to under-perform the BINHO. But the stock apears to be less risky and, when comparing its historical volatility, Penguen Gida Sanayi is 2.32 times less risky than BINHO. The stock trades about -0.06 of its potential returns per unit of risk. The BINHO is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  30,100  in BINHO on October 4, 2024 and sell it today you would earn a total of  1,600  from holding BINHO or generate 5.32% return on investment over 90 days.

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

Penguen Gida Sanayi  vs.  BINHO

Penguen Gida Sanayi

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penguen Gida Sanayi are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Penguen Gida demonstrated solid returns over the last few months and may actually be approaching a breakup point.

BINHO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BINHO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, BINHO is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Penguen Gida and BINHO

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

The idea behind Penguen Gida Sanayi and BINHO 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.