Correlation Between Kardemir Karabuk and Borusan Yatirim

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

Diversification Opportunities for Kardemir Karabuk and Borusan Yatirim

0.74

Correlation Coefficient

Kardemir Karabuk  Borusan Yatirim

Poor diversification

The 3 months correlation between Kardemir and Borusan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Kardemir Karabuk Demir and Borusan Yatirim ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borusan Yatirim ve 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 Yatirim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borusan Yatirim ve has no effect on the direction of Kardemir Karabuk i.e., Kardemir Karabuk and Borusan Yatirim go up and down completely randomly.

Pair Corralation between Kardemir Karabuk and Borusan Yatirim

Assuming the 90 days trading horizon Kardemir Karabuk is expected to generate 1.67 times less return on investment than Borusan Yatirim. But when comparing it to its historical volatility, Kardemir Karabuk Demir is 1.27 times less risky than Borusan Yatirim. It trades about 0.04 of its potential returns per unit of risk. Borusan Yatirim ve is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  117,760  in Borusan Yatirim ve on September 23, 2024 and sell it today you would earn a total of  106,240  from holding Borusan Yatirim ve or generate 90.22% return on investment over 90 days.

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

Kardemir Karabuk Demir  vs.  Borusan Yatirim ve

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 Yatirim ve

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Borusan Yatirim ve are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Borusan Yatirim may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kardemir Karabuk and Borusan Yatirim

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

The idea behind Kardemir Karabuk Demir and Borusan Yatirim ve 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.