Correlation Between Nuh Cimento and Borusan Mannesmann

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

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

Diversification Opportunities for Nuh Cimento and Borusan Mannesmann

-0.04

Correlation Coefficient

Nuh Cimento  Borusan Mannesmann

Good diversification

The 3 months correlation between Nuh and Borusan is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nuh Cimento 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 Nuh Cimento 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 Nuh Cimento 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 Nuh Cimento i.e., Nuh Cimento and Borusan Mannesmann go up and down completely randomly.

Pair Corralation between Nuh Cimento and Borusan Mannesmann

Assuming the 90 days trading horizon Nuh Cimento Sanayi is expected to under-perform the Borusan Mannesmann. In addition to that, Nuh Cimento is 1.45 times more volatile than Borusan Mannesmann Boru. It trades about -0.22 of its total potential returns per unit of risk. Borusan Mannesmann Boru is currently generating about -0.3 per unit of volatility. If you would invest  45,400  in Borusan Mannesmann Boru on October 14, 2024 and sell it today you would lose (3,450) from holding Borusan Mannesmann Boru or give up 7.6% of portfolio value over 90 days.

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

Nuh Cimento Sanayi  vs.  Borusan Mannesmann Boru

Nuh Cimento Sanayi

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuh Cimento Sanayi are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Nuh Cimento demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Borusan Mannesmann Boru

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Borusan Mannesmann Boru are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Borusan Mannesmann is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nuh Cimento and Borusan Mannesmann

The main advantage of trading using opposite Nuh Cimento and Borusan Mannesmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuh Cimento 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 Nuh Cimento 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.