Correlation Between Borlease Otomotiv and Smart Gunes

Can any of the company-specific risk be diversified away by investing in both Borlease Otomotiv and Smart Gunes 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 Smart Gunes 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 Smart Gunes Enerjisi, you can compare the effects of market volatilities on Borlease Otomotiv and Smart Gunes 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 Smart Gunes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borlease Otomotiv and Smart Gunes.

Diversification Opportunities for Borlease Otomotiv and Smart Gunes

-0.34

Correlation Coefficient

Borlease Otomotiv  Smart Gunes

Very good diversification

The 3 months correlation between Borlease and Smart is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Borlease Otomotiv AS and Smart Gunes Enerjisi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Gunes Enerjisi 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 Smart Gunes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Gunes Enerjisi has no effect on the direction of Borlease Otomotiv i.e., Borlease Otomotiv and Smart Gunes go up and down completely randomly.

Pair Corralation between Borlease Otomotiv and Smart Gunes

Assuming the 90 days trading horizon Borlease Otomotiv AS is expected to generate 0.74 times more return on investment than Smart Gunes. However, Borlease Otomotiv AS is 1.35 times less risky than Smart Gunes. It trades about 0.19 of its potential returns per unit of risk. Smart Gunes Enerjisi is currently generating about -0.1 per unit of risk. If you would invest  6,480  in Borlease Otomotiv AS on December 25, 2024 and sell it today you would earn a total of  2,170  from holding Borlease Otomotiv AS or generate 33.49% 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.  Smart Gunes Enerjisi

Borlease Otomotiv

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Borlease Otomotiv AS are ranked lower than 14 (%) 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.

Smart Gunes Enerjisi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smart Gunes Enerjisi 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 April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Borlease Otomotiv and Smart Gunes

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

The idea behind Borlease Otomotiv AS and Smart Gunes Enerjisi 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.