Correlation Between Armada Hflr and Borusan Mannesmann

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

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

Diversification Opportunities for Armada Hflr and Borusan Mannesmann

0.49

Correlation Coefficient

Armada Hflr  Borusan Mannesmann

Very weak diversification

The 3 months correlation between Armada and Borusan is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr 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 Armada Hflr 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 Armada Hflr Pr 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 Armada Hflr i.e., Armada Hflr and Borusan Mannesmann go up and down completely randomly.

Pair Corralation between Armada Hflr and Borusan Mannesmann

Considering the 90-day investment horizon Armada Hflr is expected to generate 31.97 times less return on investment than Borusan Mannesmann. But when comparing it to its historical volatility, Armada Hflr Pr is 2.78 times less risky than Borusan Mannesmann. It trades about 0.01 of its potential returns per unit of risk. Borusan Mannesmann Boru is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8,450  in Borusan Mannesmann Boru on September 24, 2024 and sell it today you would earn a total of  35,075  from holding Borusan Mannesmann Boru or generate 415.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Armada Hflr Pr  vs.  Borusan Mannesmann Boru

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 Armada Hflr and Borusan Mannesmann

The main advantage of trading using opposite Armada Hflr and Borusan Mannesmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr 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 Armada Hflr Pr 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.