Correlation Between Penguen Gida and Borlease Otomotiv

Can any of the company-specific risk be diversified away by investing in both Penguen Gida 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 Penguen Gida and Borlease Otomotiv 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 Borlease Otomotiv AS, you can compare the effects of market volatilities on Penguen Gida 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 Penguen Gida with a short position of Borlease Otomotiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penguen Gida and Borlease Otomotiv.

Diversification Opportunities for Penguen Gida and Borlease Otomotiv

0.8

Correlation Coefficient

Penguen Gida  Borlease Otomotiv

Very poor diversification

The 3 months correlation between Penguen and Borlease is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Penguen Gida Sanayi and Borlease Otomotiv AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borlease Otomotiv 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 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 Penguen Gida i.e., Penguen Gida and Borlease Otomotiv go up and down completely randomly.

Pair Corralation between Penguen Gida and Borlease Otomotiv

Assuming the 90 days trading horizon Penguen Gida is expected to generate 3.76 times less return on investment than Borlease Otomotiv. But when comparing it to its historical volatility, Penguen Gida Sanayi is 1.37 times less risky than Borlease Otomotiv. It trades about 0.14 of its potential returns per unit of risk. Borlease Otomotiv AS is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  3,896  in Borlease Otomotiv AS on October 8, 2024 and sell it today you would earn a total of  2,959  from holding Borlease Otomotiv AS or generate 75.95% return on investment over 90 days.

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

Penguen Gida Sanayi  vs.  Borlease Otomotiv AS

Penguen Gida Sanayi

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Penguen Gida Sanayi are ranked lower than 11 (%) 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.

Borlease Otomotiv

Risk-Adjusted Performance

30 of 100

Very 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 uncertain forward indicators, Borlease Otomotiv demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penguen Gida and Borlease Otomotiv

The main advantage of trading using opposite Penguen Gida and Borlease Otomotiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penguen Gida 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 Penguen Gida Sanayi 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.