Correlation Between Kardemir Karabuk and Borusan Mannesmann

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

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

Diversification Opportunities for Kardemir Karabuk and Borusan Mannesmann

-0.11

Correlation Coefficient

Kardemir Karabuk  Borusan Mannesmann

Good diversification

The 3 months correlation between Kardemir and Borusan is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Kardemir Karabuk Demir 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 Kardemir Karabuk 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 Kardemir Karabuk Demir 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 Kardemir Karabuk i.e., Kardemir Karabuk and Borusan Mannesmann go up and down completely randomly.

Pair Corralation between Kardemir Karabuk and Borusan Mannesmann

Assuming the 90 days trading horizon Kardemir Karabuk is expected to generate 3.41 times less return on investment than Borusan Mannesmann. But when comparing it to its historical volatility, Kardemir Karabuk Demir is 1.41 times less risky than Borusan Mannesmann. It trades about 0.04 of its potential returns per unit of risk. Borusan Mannesmann Boru is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8,415  in Borusan Mannesmann Boru on September 23, 2024 and sell it today you would earn a total of  35,110  from holding Borusan Mannesmann Boru or generate 417.23% return on investment over 90 days.

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

Kardemir Karabuk Demir  vs.  Borusan Mannesmann Boru

Kardemir Karabuk Demir

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kardemir Karabuk demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 Kardemir Karabuk and Borusan Mannesmann

The main advantage of trading using opposite Kardemir Karabuk and Borusan Mannesmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kardemir Karabuk 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 Kardemir Karabuk Demir 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.