Correlation Between Koc Holding and Vakif Menkul

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

Diversification Opportunities for Koc Holding and Vakif Menkul

0.69

Correlation Coefficient

Koc Holding  Vakif Menkul

Poor diversification

The 3 months correlation between Koc and Vakif is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Koc Holding AS and Vakif Menkul Kiymet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vakif Menkul Kiymet 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 Vakif Menkul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vakif Menkul Kiymet has no effect on the direction of Koc Holding i.e., Koc Holding and Vakif Menkul go up and down completely randomly.

Pair Corralation between Koc Holding and Vakif Menkul

Assuming the 90 days trading horizon Koc Holding is expected to generate 5.82 times less return on investment than Vakif Menkul. But when comparing it to its historical volatility, Koc Holding AS is 1.35 times less risky than Vakif Menkul. It trades about 0.01 of its potential returns per unit of risk. Vakif Menkul Kiymet is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,845  in Vakif Menkul Kiymet on October 1, 2024 and sell it today you would earn a total of  84.00  from holding Vakif Menkul Kiymet or generate 4.55% 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.  Vakif Menkul Kiymet

Koc Holding AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koc Holding AS has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Vakif Menkul Kiymet

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Koc Holding and Vakif Menkul

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

The idea behind Koc Holding AS and Vakif Menkul Kiymet 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.