Correlation Between Burcelik Vana and Borlease Otomotiv

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

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

Diversification Opportunities for Burcelik Vana and Borlease Otomotiv

-0.74

Correlation Coefficient

Burcelik Vana  Borlease Otomotiv

Pay attention - limited upside

The 3 months correlation between Burcelik and Borlease is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Burcelik Vana Sanayi and Borlease Otomotiv AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borlease Otomotiv and Burcelik Vana 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 Burcelik Vana Sanayi are associated (or correlated) with Borlease Otomotiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borlease Otomotiv has no effect on the direction of Burcelik Vana i.e., Burcelik Vana and Borlease Otomotiv go up and down completely randomly.

Pair Corralation between Burcelik Vana and Borlease Otomotiv

Assuming the 90 days trading horizon Burcelik Vana Sanayi is expected to generate 1.42 times more return on investment than Borlease Otomotiv. However, Burcelik Vana is 1.42 times more volatile than Borlease Otomotiv AS. It trades about 0.06 of its potential returns per unit of risk. Borlease Otomotiv AS is currently generating about 0.08 per unit of risk. If you would invest  6,830  in Burcelik Vana Sanayi on September 23, 2024 and sell it today you would earn a total of  4,020  from holding Burcelik Vana Sanayi or generate 58.86% return on investment over 90 days.

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

Burcelik Vana Sanayi  vs.  Borlease Otomotiv AS

Burcelik Vana Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Burcelik Vana Sanayi 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.

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 uncertain forward indicators, Borlease Otomotiv demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Burcelik Vana and Borlease Otomotiv

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

The idea behind Burcelik Vana Sanayi and Borlease Otomotiv AS 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.