Correlation Between EIS Eczacibasi and Borusan Mannesmann

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

By analyzing existing cross correlation between EIS Eczacibasi Ilac and Borusan Mannesmann Boru, you can compare the effects of market volatilities on EIS Eczacibasi and Borusan Mannesmann 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 EIS Eczacibasi with a short position of Borusan Mannesmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIS Eczacibasi and Borusan Mannesmann.

Diversification Opportunities for EIS Eczacibasi and Borusan Mannesmann

0.2

Correlation Coefficient

EIS Eczacibasi  Borusan Mannesmann

Modest diversification

The 3 months correlation between EIS and Borusan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding EIS Eczacibasi Ilac and Borusan Mannesmann Boru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borusan Mannesmann Boru and EIS Eczacibasi 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 EIS Eczacibasi Ilac are associated (or correlated) with Borusan Mannesmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borusan Mannesmann Boru has no effect on the direction of EIS Eczacibasi i.e., EIS Eczacibasi and Borusan Mannesmann go up and down completely randomly.

Pair Corralation between EIS Eczacibasi and Borusan Mannesmann

Assuming the 90 days trading horizon EIS Eczacibasi Ilac is expected to generate 1.22 times more return on investment than Borusan Mannesmann. However, EIS Eczacibasi is 1.22 times more volatile than Borusan Mannesmann Boru. It trades about 0.24 of its potential returns per unit of risk. Borusan Mannesmann Boru is currently generating about -0.32 per unit of risk. If you would invest  4,578  in EIS Eczacibasi Ilac on September 24, 2024 and sell it today you would earn a total of  304.00  from holding EIS Eczacibasi Ilac or generate 6.64% return on investment over 90 days.

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

EIS Eczacibasi Ilac  vs.  Borusan Mannesmann Boru

EIS Eczacibasi Ilac

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EIS Eczacibasi Ilac are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, EIS Eczacibasi is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Borusan Mannesmann Boru

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Borusan Mannesmann Boru 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 EIS Eczacibasi and Borusan Mannesmann

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

The idea behind EIS Eczacibasi Ilac and Borusan Mannesmann Boru 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.