Correlation Between Kocaer Celik and Koza Altin

Can any of the company-specific risk be diversified away by investing in both Kocaer Celik and Koza Altin 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 Koza Altin 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 Koza Altin Isletmeleri, you can compare the effects of market volatilities on Kocaer Celik and Koza Altin 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 Koza Altin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kocaer Celik and Koza Altin.

Diversification Opportunities for Kocaer Celik and Koza Altin

0.75

Correlation Coefficient

Kocaer Celik  Koza Altin

Poor diversification

The 3 months correlation between Kocaer and Koza is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kocaer Celik Sanayi and Koza Altin Isletmeleri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koza Altin Isletmeleri 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 Koza Altin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koza Altin Isletmeleri has no effect on the direction of Kocaer Celik i.e., Kocaer Celik and Koza Altin go up and down completely randomly.

Pair Corralation between Kocaer Celik and Koza Altin

Assuming the 90 days trading horizon Kocaer Celik is expected to generate 3.86 times less return on investment than Koza Altin. But when comparing it to its historical volatility, Kocaer Celik Sanayi is 4.2 times less risky than Koza Altin. It trades about 0.05 of its potential returns per unit of risk. Koza Altin Isletmeleri is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,298  in Koza Altin Isletmeleri on September 5, 2024 and sell it today you would earn a total of  62.00  from holding Koza Altin Isletmeleri or generate 2.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

Kocaer Celik Sanayi  vs.  Koza Altin Isletmeleri

Kocaer Celik Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Koza Altin Isletmeleri

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kocaer Celik and Koza Altin

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

The idea behind Kocaer Celik Sanayi and Koza Altin Isletmeleri 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.