Correlation Between Burcelik Vana and MEGA METAL

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

Diversification Opportunities for Burcelik Vana and MEGA METAL

-0.65

Correlation Coefficient

Burcelik Vana  MEGA METAL

Excellent diversification

The 3 months correlation between Burcelik and MEGA is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Burcelik Vana Sanayi and MEGA METAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEGA METAL 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 MEGA METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEGA METAL has no effect on the direction of Burcelik Vana i.e., Burcelik Vana and MEGA METAL go up and down completely randomly.

Pair Corralation between Burcelik Vana and MEGA METAL

Assuming the 90 days trading horizon Burcelik Vana Sanayi is expected to generate 1.12 times more return on investment than MEGA METAL. However, Burcelik Vana is 1.12 times more volatile than MEGA METAL. It trades about 0.07 of its potential returns per unit of risk. MEGA METAL is currently generating about 0.02 per unit of risk. If you would invest  3,690  in Burcelik Vana Sanayi on October 11, 2024 and sell it today you would earn a total of  7,200  from holding Burcelik Vana Sanayi or generate 195.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	53.85%
Values	Daily Returns

Burcelik Vana Sanayi  vs.  MEGA METAL

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 February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

MEGA METAL

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MEGA METAL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, MEGA METAL is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Burcelik Vana and MEGA METAL

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

The idea behind Burcelik Vana Sanayi and MEGA METAL 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.