Correlation Between Ford Otomotiv and Zorlu Enerji

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

By analyzing existing cross correlation between Ford Otomotiv Sanayi and Zorlu Enerji Elektrik, you can compare the effects of market volatilities on Ford Otomotiv and Zorlu Enerji 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 Ford Otomotiv with a short position of Zorlu Enerji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford Otomotiv and Zorlu Enerji.

Diversification Opportunities for Ford Otomotiv and Zorlu Enerji

0.36

Correlation Coefficient

Ford Otomotiv  Zorlu Enerji

Weak diversification

The 3 months correlation between Ford and Zorlu is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ford Otomotiv Sanayi and Zorlu Enerji Elektrik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zorlu Enerji Elektrik and Ford Otomotiv 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 Ford Otomotiv Sanayi are associated (or correlated) with Zorlu Enerji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zorlu Enerji Elektrik has no effect on the direction of Ford Otomotiv i.e., Ford Otomotiv and Zorlu Enerji go up and down completely randomly.

Pair Corralation between Ford Otomotiv and Zorlu Enerji

Assuming the 90 days trading horizon Ford Otomotiv Sanayi is expected to generate 1.23 times more return on investment than Zorlu Enerji. However, Ford Otomotiv is 1.23 times more volatile than Zorlu Enerji Elektrik. It trades about 0.05 of its potential returns per unit of risk. Zorlu Enerji Elektrik is currently generating about 0.01 per unit of risk. If you would invest  89,922  in Ford Otomotiv Sanayi on September 22, 2024 and sell it today you would earn a total of  5,028  from holding Ford Otomotiv Sanayi or generate 5.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Ford Otomotiv Sanayi  vs.  Zorlu Enerji Elektrik

Ford Otomotiv Sanayi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Otomotiv Sanayi are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Ford Otomotiv may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Zorlu Enerji Elektrik

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ford Otomotiv and Zorlu Enerji

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

The idea behind Ford Otomotiv Sanayi and Zorlu Enerji Elektrik 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.