Correlation Between Morgan Stanley and Borusan Mannesmann

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

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

Diversification Opportunities for Morgan Stanley and Borusan Mannesmann

-0.25

Correlation Coefficient

Morgan Stanley  Borusan Mannesmann

Very good diversification

The 3 months correlation between Morgan and Borusan is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct 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 Morgan Stanley 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 Morgan Stanley Direct 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 Morgan Stanley i.e., Morgan Stanley and Borusan Mannesmann go up and down completely randomly.

Pair Corralation between Morgan Stanley and Borusan Mannesmann

Given the investment horizon of 90 days Morgan Stanley is expected to generate 8.32 times less return on investment than Borusan Mannesmann. But when comparing it to its historical volatility, Morgan Stanley Direct is 2.73 times less risky than Borusan Mannesmann. It trades about 0.03 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 Against
Strength	Insignificant
Accuracy	46.77%
Values	Daily Returns

Morgan Stanley Direct  vs.  Borusan Mannesmann Boru

Morgan Stanley Direct

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Morgan Stanley and Borusan Mannesmann

The main advantage of trading using opposite Morgan Stanley and Borusan Mannesmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley 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 Morgan Stanley Direct 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.