Correlation Between Nasdaq and Borusan Mannesmann

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

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

Diversification Opportunities for Nasdaq and Borusan Mannesmann

0.15

Correlation Coefficient

Nasdaq  Borusan Mannesmann

Average diversification

The 3 months correlation between Nasdaq and Borusan is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc 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 Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Borusan Mannesmann go up and down completely randomly.

Pair Corralation between Nasdaq and Borusan Mannesmann

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.94 times more return on investment than Borusan Mannesmann. However, Nasdaq Inc is 1.07 times less risky than Borusan Mannesmann. It trades about -0.22 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  8,128  in Nasdaq Inc on September 24, 2024 and sell it today you would lose (358.00) from holding Nasdaq Inc or give up 4.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Nasdaq Inc  vs.  Borusan Mannesmann Boru

Nasdaq Inc

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail 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 Nasdaq and Borusan Mannesmann

The main advantage of trading using opposite Nasdaq and Borusan Mannesmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.