Correlation Between Koza Anadolu and Seyitler Kimya

Can any of the company-specific risk be diversified away by investing in both Koza Anadolu and Seyitler Kimya 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 Koza Anadolu and Seyitler Kimya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Koza Anadolu Metal and Seyitler Kimya Sanayi, you can compare the effects of market volatilities on Koza Anadolu and Seyitler Kimya 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 Koza Anadolu with a short position of Seyitler Kimya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koza Anadolu and Seyitler Kimya.

Diversification Opportunities for Koza Anadolu and Seyitler Kimya

-0.43

Correlation Coefficient

Koza Anadolu  Seyitler Kimya

Very good diversification

The 3 months correlation between Koza and Seyitler is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Koza Anadolu Metal and Seyitler Kimya Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seyitler Kimya Sanayi and Koza Anadolu 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 Koza Anadolu Metal are associated (or correlated) with Seyitler Kimya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seyitler Kimya Sanayi has no effect on the direction of Koza Anadolu i.e., Koza Anadolu and Seyitler Kimya go up and down completely randomly.

Pair Corralation between Koza Anadolu and Seyitler Kimya

Assuming the 90 days trading horizon Koza Anadolu Metal is expected to generate 1.21 times more return on investment than Seyitler Kimya. However, Koza Anadolu is 1.21 times more volatile than Seyitler Kimya Sanayi. It trades about -0.27 of its potential returns per unit of risk. Seyitler Kimya Sanayi is currently generating about -0.47 per unit of risk. If you would invest  7,470  in Koza Anadolu Metal on September 22, 2024 and sell it today you would lose (960.00) from holding Koza Anadolu Metal or give up 12.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Koza Anadolu Metal  vs.  Seyitler Kimya Sanayi

Koza Anadolu Metal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Seyitler Kimya Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seyitler Kimya Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Koza Anadolu and Seyitler Kimya

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

The idea behind Koza Anadolu Metal and Seyitler Kimya 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.