Correlation Between Borusan Yatirim and Izmir Demir

Can any of the company-specific risk be diversified away by investing in both Borusan Yatirim and Izmir Demir 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 Borusan Yatirim and Izmir Demir into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Borusan Yatirim ve and Izmir Demir Celik, you can compare the effects of market volatilities on Borusan Yatirim and Izmir Demir 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 Borusan Yatirim with a short position of Izmir Demir. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borusan Yatirim and Izmir Demir.

Diversification Opportunities for Borusan Yatirim and Izmir Demir

0.66

Correlation Coefficient

Borusan Yatirim  Izmir Demir

Poor diversification

The 3 months correlation between Borusan and Izmir is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Borusan Yatirim ve and Izmir Demir Celik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Izmir Demir Celik and Borusan Yatirim 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 Borusan Yatirim ve are associated (or correlated) with Izmir Demir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Izmir Demir Celik has no effect on the direction of Borusan Yatirim i.e., Borusan Yatirim and Izmir Demir go up and down completely randomly.

Pair Corralation between Borusan Yatirim and Izmir Demir

Assuming the 90 days trading horizon Borusan Yatirim ve is expected to generate 1.2 times more return on investment than Izmir Demir. However, Borusan Yatirim is 1.2 times more volatile than Izmir Demir Celik. It trades about -0.03 of its potential returns per unit of risk. Izmir Demir Celik is currently generating about -0.07 per unit of risk. If you would invest  205,500  in Borusan Yatirim ve on December 28, 2024 and sell it today you would lose (12,400) from holding Borusan Yatirim ve or give up 6.03% of portfolio value over 90 days.

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

Borusan Yatirim ve  vs.  Izmir Demir Celik

Borusan Yatirim ve

Risk-Adjusted Performance

Very Weak

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

Izmir Demir Celik

Risk-Adjusted Performance

Very Weak

Over the last 90 days Izmir Demir Celik has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Borusan Yatirim and Izmir Demir

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

The idea behind Borusan Yatirim ve and Izmir Demir Celik 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 Managers module to screen money managers from public funds and ETFs managed around the world.