Correlation Between Koc Holding and Arcelik AS

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

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

Diversification Opportunities for Koc Holding and Arcelik AS

0.72

Correlation Coefficient

Koc Holding  Arcelik AS

Poor diversification

The 3 months correlation between Koc and Arcelik is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Koc Holding AS and Arcelik AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcelik AS and Koc Holding 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 Koc Holding AS are associated (or correlated) with Arcelik AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcelik AS has no effect on the direction of Koc Holding i.e., Koc Holding and Arcelik AS go up and down completely randomly.

Pair Corralation between Koc Holding and Arcelik AS

Assuming the 90 days trading horizon Koc Holding AS is expected to generate 0.89 times more return on investment than Arcelik AS. However, Koc Holding AS is 1.13 times less risky than Arcelik AS. It trades about 0.1 of its potential returns per unit of risk. Arcelik AS is currently generating about 0.05 per unit of risk. If you would invest  6,682  in Koc Holding AS on September 5, 2024 and sell it today you would earn a total of  12,788  from holding Koc Holding AS or generate 191.38% return on investment over 90 days.

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

Koc Holding AS  vs.  Arcelik AS

Koc Holding AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Koc Holding AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Koc Holding is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Arcelik AS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Koc Holding and Arcelik AS

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

The idea behind Koc Holding AS and Arcelik 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.