Correlation Between Visa and Borusan Mannesmann

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

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

Diversification Opportunities for Visa and Borusan Mannesmann

0.07

Correlation Coefficient

Visa  Borusan Mannesmann

Significant diversification

The 3 months correlation between Visa and Borusan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Borusan Mannesmann go up and down completely randomly.

Pair Corralation between Visa and Borusan Mannesmann

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.9 times more return on investment than Borusan Mannesmann. However, Visa Class A is 1.12 times less risky than Borusan Mannesmann. It trades about 0.08 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  31,319  in Visa Class A on September 24, 2024 and sell it today you would earn a total of  452.00  from holding Visa Class A or generate 1.44% return on investment over 90 days.

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

Visa Class A  vs.  Borusan Mannesmann Boru

Visa Class A

Risk-Adjusted Performance

17 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed 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 Visa and Borusan Mannesmann

The main advantage of trading using opposite Visa and Borusan Mannesmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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 Visa Class A 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 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.