Correlation Between IZDEMIR Enerji and Turkiye Kalkinma

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

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

Diversification Opportunities for IZDEMIR Enerji and Turkiye Kalkinma

0.06

Correlation Coefficient

IZDEMIR Enerji  Turkiye Kalkinma

Significant diversification

The 3 months correlation between IZDEMIR and Turkiye is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding IZDEMIR Enerji Elektrik and Turkiye Kalkinma Bankasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkiye Kalkinma Bankasi and IZDEMIR Enerji 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 IZDEMIR Enerji Elektrik are associated (or correlated) with Turkiye Kalkinma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turkiye Kalkinma Bankasi has no effect on the direction of IZDEMIR Enerji i.e., IZDEMIR Enerji and Turkiye Kalkinma go up and down completely randomly.

Pair Corralation between IZDEMIR Enerji and Turkiye Kalkinma

Assuming the 90 days trading horizon IZDEMIR Enerji Elektrik is expected to under-perform the Turkiye Kalkinma. But the stock apears to be less risky and, when comparing its historical volatility, IZDEMIR Enerji Elektrik is 1.31 times less risky than Turkiye Kalkinma. The stock trades about -0.06 of its potential returns per unit of risk. The Turkiye Kalkinma Bankasi is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,237  in Turkiye Kalkinma Bankasi on September 15, 2024 and sell it today you would lose (751.00) from holding Turkiye Kalkinma Bankasi or give up 33.57% of portfolio value over 90 days.

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

IZDEMIR Enerji Elektrik  vs.  Turkiye Kalkinma Bankasi

IZDEMIR Enerji Elektrik

Risk-Adjusted Performance

4 of 100

Insignificant

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

Turkiye Kalkinma Bankasi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IZDEMIR Enerji and Turkiye Kalkinma

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

The idea behind IZDEMIR Enerji Elektrik and Turkiye Kalkinma Bankasi 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.