Correlation Between Cemtas Celik and Kardemir Karabuk

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

By analyzing existing cross correlation between Cemtas Celik Makina and Kardemir Karabuk Demir, you can compare the effects of market volatilities on Cemtas Celik and Kardemir Karabuk 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 Cemtas Celik with a short position of Kardemir Karabuk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cemtas Celik and Kardemir Karabuk.

Diversification Opportunities for Cemtas Celik and Kardemir Karabuk

0.5

Correlation Coefficient

Cemtas Celik  Kardemir Karabuk

Very weak diversification

The 3 months correlation between Cemtas and Kardemir is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cemtas Celik Makina and Kardemir Karabuk Demir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kardemir Karabuk Demir and Cemtas Celik 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 Cemtas Celik Makina are associated (or correlated) with Kardemir Karabuk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kardemir Karabuk Demir has no effect on the direction of Cemtas Celik i.e., Cemtas Celik and Kardemir Karabuk go up and down completely randomly.

Pair Corralation between Cemtas Celik and Kardemir Karabuk

Assuming the 90 days trading horizon Cemtas Celik Makina is expected to under-perform the Kardemir Karabuk. But the stock apears to be less risky and, when comparing its historical volatility, Cemtas Celik Makina is 1.74 times less risky than Kardemir Karabuk. The stock trades about -0.05 of its potential returns per unit of risk. The Kardemir Karabuk Demir is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,890  in Kardemir Karabuk Demir on September 24, 2024 and sell it today you would earn a total of  950.00  from holding Kardemir Karabuk Demir or generate 50.26% return on investment over 90 days.

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

Cemtas Celik Makina  vs.  Kardemir Karabuk Demir

Cemtas Celik Makina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cemtas Celik Makina has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Cemtas Celik is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Kardemir Karabuk Demir

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kardemir Karabuk demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cemtas Celik and Kardemir Karabuk

The main advantage of trading using opposite Cemtas Celik and Kardemir Karabuk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cemtas Celik position performs unexpectedly, Kardemir Karabuk 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 Kardemir Karabuk will offset losses from the drop in Kardemir Karabuk's long position.

The idea behind Cemtas Celik Makina and Kardemir Karabuk Demir 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.