Correlation Between Bosch Fren and Petkim Petrokimya

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

By analyzing existing cross correlation between Bosch Fren Sistemleri and Petkim Petrokimya Holding, you can compare the effects of market volatilities on Bosch Fren and Petkim Petrokimya 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 Bosch Fren with a short position of Petkim Petrokimya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bosch Fren and Petkim Petrokimya.

Diversification Opportunities for Bosch Fren and Petkim Petrokimya

-0.16

Correlation Coefficient

Bosch Fren  Petkim Petrokimya

Good diversification

The 3 months correlation between Bosch and Petkim is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bosch Fren Sistemleri and Petkim Petrokimya Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petkim Petrokimya Holding and Bosch Fren 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 Bosch Fren Sistemleri are associated (or correlated) with Petkim Petrokimya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petkim Petrokimya Holding has no effect on the direction of Bosch Fren i.e., Bosch Fren and Petkim Petrokimya go up and down completely randomly.

Pair Corralation between Bosch Fren and Petkim Petrokimya

Assuming the 90 days trading horizon Bosch Fren Sistemleri is expected to generate 1.23 times more return on investment than Petkim Petrokimya. However, Bosch Fren is 1.23 times more volatile than Petkim Petrokimya Holding. It trades about -0.03 of its potential returns per unit of risk. Petkim Petrokimya Holding is currently generating about -0.17 per unit of risk. If you would invest  73,500  in Bosch Fren Sistemleri on September 23, 2024 and sell it today you would lose (5,450) from holding Bosch Fren Sistemleri or give up 7.41% of portfolio value over 90 days.

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

Bosch Fren Sistemleri  vs.  Petkim Petrokimya Holding

Bosch Fren Sistemleri

Risk-Adjusted Performance

0 of 100

Very Weak

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

Petkim Petrokimya Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petkim Petrokimya Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Bosch Fren and Petkim Petrokimya

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

The idea behind Bosch Fren Sistemleri and Petkim Petrokimya Holding 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.