Correlation Between Eregli Demir and Kocaer Celik

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

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

Diversification Opportunities for Eregli Demir and Kocaer Celik

0.49

Correlation Coefficient

Eregli Demir  Kocaer Celik

Very weak diversification

The 3 months correlation between Eregli and Kocaer is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Eregli Demir ve and Kocaer Celik Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kocaer Celik Sanayi and Eregli Demir 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 Eregli Demir ve are associated (or correlated) with Kocaer Celik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kocaer Celik Sanayi has no effect on the direction of Eregli Demir i.e., Eregli Demir and Kocaer Celik go up and down completely randomly.

Pair Corralation between Eregli Demir and Kocaer Celik

Assuming the 90 days trading horizon Eregli Demir is expected to generate 1.21 times less return on investment than Kocaer Celik. But when comparing it to its historical volatility, Eregli Demir ve is 1.3 times less risky than Kocaer Celik. It trades about 0.11 of its potential returns per unit of risk. Kocaer Celik Sanayi is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,358  in Kocaer Celik Sanayi on September 12, 2024 and sell it today you would earn a total of  188.00  from holding Kocaer Celik Sanayi or generate 13.84% return on investment over 90 days.

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

Eregli Demir ve  vs.  Kocaer Celik Sanayi

Eregli Demir ve

Risk-Adjusted Performance

8 of 100

OK

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

Kocaer Celik Sanayi

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Eregli Demir and Kocaer Celik

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

The idea behind Eregli Demir ve and Kocaer Celik Sanayi 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.