Correlation Between Makina Takim and Borlease Otomotiv

Can any of the company-specific risk be diversified away by investing in both Makina Takim and Borlease Otomotiv 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 Makina Takim and Borlease Otomotiv into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Makina Takim Endustrisi and Borlease Otomotiv AS, you can compare the effects of market volatilities on Makina Takim and Borlease Otomotiv 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 Makina Takim with a short position of Borlease Otomotiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Makina Takim and Borlease Otomotiv.

Diversification Opportunities for Makina Takim and Borlease Otomotiv

0.88

Correlation Coefficient

Makina Takim  Borlease Otomotiv

Very poor diversification

The 3 months correlation between Makina and Borlease is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Makina Takim Endustrisi and Borlease Otomotiv AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borlease Otomotiv and Makina Takim 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 Makina Takim Endustrisi are associated (or correlated) with Borlease Otomotiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borlease Otomotiv has no effect on the direction of Makina Takim i.e., Makina Takim and Borlease Otomotiv go up and down completely randomly.

Pair Corralation between Makina Takim and Borlease Otomotiv

Assuming the 90 days trading horizon Makina Takim is expected to generate 3.04 times less return on investment than Borlease Otomotiv. In addition to that, Makina Takim is 1.05 times more volatile than Borlease Otomotiv AS. It trades about 0.03 of its total potential returns per unit of risk. Borlease Otomotiv AS is currently generating about 0.11 per unit of volatility. If you would invest  2,732  in Borlease Otomotiv AS on October 4, 2024 and sell it today you would earn a total of  4,108  from holding Borlease Otomotiv AS or generate 150.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	61.21%
Values	Daily Returns

Makina Takim Endustrisi  vs.  Borlease Otomotiv AS

Makina Takim Endustrisi

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Makina Takim Endustrisi are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Makina Takim demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Borlease Otomotiv

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Borlease Otomotiv AS are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Borlease Otomotiv demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Makina Takim and Borlease Otomotiv

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

The idea behind Makina Takim Endustrisi and Borlease Otomotiv AS 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.