Correlation Between Ege Endustri and Borusan Mannesmann

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

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

Diversification Opportunities for Ege Endustri and Borusan Mannesmann

0.8

Correlation Coefficient

Ege Endustri  Borusan Mannesmann

Very poor diversification

The 3 months correlation between Ege and Borusan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ege Endustri ve 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 Ege Endustri 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 Ege Endustri ve 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 Ege Endustri i.e., Ege Endustri and Borusan Mannesmann go up and down completely randomly.

Pair Corralation between Ege Endustri and Borusan Mannesmann

Assuming the 90 days trading horizon Ege Endustri ve is expected to generate 0.97 times more return on investment than Borusan Mannesmann. However, Ege Endustri ve is 1.03 times less risky than Borusan Mannesmann. It trades about -0.28 of its potential returns per unit of risk. Borusan Mannesmann Boru is currently generating about -0.3 per unit of risk. If you would invest  1,049,250  in Ege Endustri ve on October 14, 2024 and sell it today you would lose (71,500) from holding Ege Endustri ve or give up 6.81% of portfolio value over 90 days.

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

Ege Endustri ve  vs.  Borusan Mannesmann Boru

Ege Endustri ve

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ege Endustri ve are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Ege Endustri may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Borusan Mannesmann Boru

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Ege Endustri and Borusan Mannesmann

The main advantage of trading using opposite Ege Endustri and Borusan Mannesmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ege Endustri 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 Ege Endustri ve 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.