Correlation Between Kocaer Celik and Pasifik Eurasia

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

Diversification Opportunities for Kocaer Celik and Pasifik Eurasia

0.82

Correlation Coefficient

Kocaer Celik  Pasifik Eurasia

Very poor diversification

The 3 months correlation between Kocaer and Pasifik is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Kocaer Celik Sanayi and Pasifik Eurasia Lojistik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pasifik Eurasia Lojistik 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 Pasifik Eurasia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pasifik Eurasia Lojistik has no effect on the direction of Kocaer Celik i.e., Kocaer Celik and Pasifik Eurasia go up and down completely randomly.

Pair Corralation between Kocaer Celik and Pasifik Eurasia

Assuming the 90 days trading horizon Kocaer Celik is expected to generate 1.13 times less return on investment than Pasifik Eurasia. In addition to that, Kocaer Celik is 1.01 times more volatile than Pasifik Eurasia Lojistik. It trades about 0.04 of its total potential returns per unit of risk. Pasifik Eurasia Lojistik is currently generating about 0.05 per unit of volatility. If you would invest  2,121  in Pasifik Eurasia Lojistik on September 26, 2024 and sell it today you would earn a total of  833.00  from holding Pasifik Eurasia Lojistik or generate 39.27% 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.  Pasifik Eurasia Lojistik

Kocaer Celik Sanayi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kocaer Celik Sanayi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pasifik Eurasia Lojistik

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pasifik Eurasia Lojistik are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Pasifik Eurasia demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kocaer Celik and Pasifik Eurasia

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

The idea behind Kocaer Celik Sanayi and Pasifik Eurasia Lojistik 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.