Correlation Between Ekiz Kimya and Borusan Mannesmann

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

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

Diversification Opportunities for Ekiz Kimya and Borusan Mannesmann

0.68

Correlation Coefficient

Ekiz Kimya  Borusan Mannesmann

Poor diversification

The 3 months correlation between Ekiz and Borusan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ekiz Kimya Sanayi 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 Ekiz Kimya 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 Ekiz Kimya Sanayi 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 Ekiz Kimya i.e., Ekiz Kimya and Borusan Mannesmann go up and down completely randomly.

Pair Corralation between Ekiz Kimya and Borusan Mannesmann

Assuming the 90 days trading horizon Ekiz Kimya Sanayi is expected to generate 1.97 times more return on investment than Borusan Mannesmann. However, Ekiz Kimya is 1.97 times more volatile than Borusan Mannesmann Boru. It trades about -0.12 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  6,200  in Ekiz Kimya Sanayi on September 24, 2024 and sell it today you would lose (365.00) from holding Ekiz Kimya Sanayi or give up 5.89% of portfolio value over 90 days.

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

Ekiz Kimya Sanayi  vs.  Borusan Mannesmann Boru

Ekiz Kimya Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ekiz Kimya Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 Ekiz Kimya and Borusan Mannesmann

The main advantage of trading using opposite Ekiz Kimya and Borusan Mannesmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ekiz Kimya 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 Ekiz Kimya Sanayi 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.