Correlation Between Teraplast Bist and Bermas SA

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

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

Diversification Opportunities for Teraplast Bist and Bermas SA

-0.09

Correlation Coefficient

Teraplast Bist  Bermas SA

Good diversification

The 3 months correlation between Teraplast and Bermas is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Teraplast Bist and Bermas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bermas SA and Teraplast Bist 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 Teraplast Bist are associated (or correlated) with Bermas SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bermas SA has no effect on the direction of Teraplast Bist i.e., Teraplast Bist and Bermas SA go up and down completely randomly.

Pair Corralation between Teraplast Bist and Bermas SA

Assuming the 90 days trading horizon Teraplast Bist is expected to under-perform the Bermas SA. But the stock apears to be less risky and, when comparing its historical volatility, Teraplast Bist is 1.37 times less risky than Bermas SA. The stock trades about -0.05 of its potential returns per unit of risk. The Bermas SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  290.00  in Bermas SA on September 13, 2024 and sell it today you would earn a total of  16.00  from holding Bermas SA or generate 5.52% return on investment over 90 days.

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

Teraplast Bist  vs.  Bermas SA

Teraplast Bist

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teraplast Bist has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Bermas SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bermas SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Bermas SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Teraplast Bist and Bermas SA

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

The idea behind Teraplast Bist and Bermas SA 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.