Correlation Between Kocaer Celik and GSD Holding

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

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

Diversification Opportunities for Kocaer Celik and GSD Holding

0.84

Correlation Coefficient

Kocaer Celik  GSD Holding

Very poor diversification

The 3 months correlation between Kocaer and GSD is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kocaer Celik Sanayi and GSD Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSD Holding AS and Kocaer 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 Kocaer Celik Sanayi are associated (or correlated) with GSD Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSD Holding AS has no effect on the direction of Kocaer Celik i.e., Kocaer Celik and GSD Holding go up and down completely randomly.

Pair Corralation between Kocaer Celik and GSD Holding

Assuming the 90 days trading horizon Kocaer Celik Sanayi is expected to generate 1.3 times more return on investment than GSD Holding. However, Kocaer Celik is 1.3 times more volatile than GSD Holding AS. It trades about 0.06 of its potential returns per unit of risk. GSD Holding AS is currently generating about 0.02 per unit of risk. If you would invest  1,328  in Kocaer Celik Sanayi on September 23, 2024 and sell it today you would earn a total of  92.00  from holding Kocaer Celik Sanayi or generate 6.93% return on investment over 90 days.

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

Kocaer Celik Sanayi  vs.  GSD Holding AS

Kocaer Celik Sanayi

Risk-Adjusted Performance

4 of 100

Insignificant

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

GSD Holding AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GSD Holding AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, GSD Holding is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kocaer Celik and GSD Holding

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

The idea behind Kocaer Celik Sanayi and GSD Holding AS 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.