Correlation Between Kardemir Karabuk and Gentas Genel

Can any of the company-specific risk be diversified away by investing in both Kardemir Karabuk and Gentas Genel 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 Kardemir Karabuk and Gentas Genel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kardemir Karabuk Demir and Gentas Genel Metal, you can compare the effects of market volatilities on Kardemir Karabuk and Gentas Genel 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 Kardemir Karabuk with a short position of Gentas Genel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kardemir Karabuk and Gentas Genel.

Diversification Opportunities for Kardemir Karabuk and Gentas Genel

0.58

Correlation Coefficient

Kardemir Karabuk  Gentas Genel

Very weak diversification

The 3 months correlation between Kardemir and Gentas is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kardemir Karabuk Demir and Gentas Genel Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentas Genel Metal and Kardemir Karabuk 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 Kardemir Karabuk Demir are associated (or correlated) with Gentas Genel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentas Genel Metal has no effect on the direction of Kardemir Karabuk i.e., Kardemir Karabuk and Gentas Genel go up and down completely randomly.

Pair Corralation between Kardemir Karabuk and Gentas Genel

Assuming the 90 days trading horizon Kardemir Karabuk Demir is expected to generate 1.16 times more return on investment than Gentas Genel. However, Kardemir Karabuk is 1.16 times more volatile than Gentas Genel Metal. It trades about 0.16 of its potential returns per unit of risk. Gentas Genel Metal is currently generating about 0.12 per unit of risk. If you would invest  2,368  in Kardemir Karabuk Demir on September 14, 2024 and sell it today you would earn a total of  562.00  from holding Kardemir Karabuk Demir or generate 23.73% return on investment over 90 days.

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

Kardemir Karabuk Demir  vs.  Gentas Genel Metal

Kardemir Karabuk Demir

Risk-Adjusted Performance

12 of 100

Good

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

Gentas Genel Metal

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gentas Genel Metal are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Gentas Genel demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kardemir Karabuk and Gentas Genel

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

The idea behind Kardemir Karabuk Demir and Gentas Genel Metal 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.