Correlation Between Borlease Otomotiv and Mercan Kimya

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

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

Diversification Opportunities for Borlease Otomotiv and Mercan Kimya

-0.14

Correlation Coefficient

Borlease Otomotiv  Mercan Kimya

Good diversification

The 3 months correlation between Borlease and Mercan is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Borlease Otomotiv AS and Mercan Kimya Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercan Kimya Sanayi and Borlease Otomotiv 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 Borlease Otomotiv AS are associated (or correlated) with Mercan Kimya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercan Kimya Sanayi has no effect on the direction of Borlease Otomotiv i.e., Borlease Otomotiv and Mercan Kimya go up and down completely randomly.

Pair Corralation between Borlease Otomotiv and Mercan Kimya

Assuming the 90 days trading horizon Borlease Otomotiv is expected to generate 4.64 times less return on investment than Mercan Kimya. In addition to that, Borlease Otomotiv is 1.14 times more volatile than Mercan Kimya Sanayi. It trades about 0.15 of its total potential returns per unit of risk. Mercan Kimya Sanayi is currently generating about 0.78 per unit of volatility. If you would invest  1,184  in Mercan Kimya Sanayi on October 22, 2024 and sell it today you would earn a total of  416.00  from holding Mercan Kimya Sanayi or generate 35.14% return on investment over 90 days.

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

Borlease Otomotiv AS  vs.  Mercan Kimya Sanayi

Borlease Otomotiv

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Borlease Otomotiv AS are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Borlease Otomotiv demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Mercan Kimya Sanayi

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mercan Kimya Sanayi are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Mercan Kimya may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Borlease Otomotiv and Mercan Kimya

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

The idea behind Borlease Otomotiv AS and Mercan Kimya Sanayi 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.