Correlation Between Koc Holding and Vestel Elektronik

Can any of the company-specific risk be diversified away by investing in both Koc Holding and Vestel Elektronik 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 Vestel Elektronik 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 Vestel Elektronik Sanayi, you can compare the effects of market volatilities on Koc Holding and Vestel Elektronik 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 Vestel Elektronik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koc Holding and Vestel Elektronik.

Diversification Opportunities for Koc Holding and Vestel Elektronik

0.65

Correlation Coefficient

Koc Holding  Vestel Elektronik

Poor diversification

The 3 months correlation between Koc and Vestel is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Koc Holding AS and Vestel Elektronik Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestel Elektronik Sanayi 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 Vestel Elektronik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestel Elektronik Sanayi has no effect on the direction of Koc Holding i.e., Koc Holding and Vestel Elektronik go up and down completely randomly.

Pair Corralation between Koc Holding and Vestel Elektronik

Assuming the 90 days trading horizon Koc Holding AS is expected to generate 0.83 times more return on investment than Vestel Elektronik. However, Koc Holding AS is 1.2 times less risky than Vestel Elektronik. It trades about 0.5 of its potential returns per unit of risk. Vestel Elektronik Sanayi is currently generating about 0.32 per unit of risk. If you would invest  16,210  in Koc Holding AS on September 5, 2024 and sell it today you would earn a total of  3,650  from holding Koc Holding AS or generate 22.52% 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.  Vestel Elektronik Sanayi

Koc Holding AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Koc Holding AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Koc Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vestel Elektronik Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Koc Holding and Vestel Elektronik

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

The idea behind Koc Holding AS and Vestel Elektronik Sanayi 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.