Correlation Between Kardemir Karabuk and Iskenderun Demir

Can any of the company-specific risk be diversified away by investing in both Kardemir Karabuk and Iskenderun Demir 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 Iskenderun Demir 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 Iskenderun Demir ve, you can compare the effects of market volatilities on Kardemir Karabuk and Iskenderun Demir 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 Iskenderun Demir. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kardemir Karabuk and Iskenderun Demir.

Diversification Opportunities for Kardemir Karabuk and Iskenderun Demir

0.65

Correlation Coefficient

Kardemir Karabuk  Iskenderun Demir

Poor diversification

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

Pair Corralation between Kardemir Karabuk and Iskenderun Demir

Assuming the 90 days trading horizon Kardemir Karabuk Demir is expected to generate 1.34 times more return on investment than Iskenderun Demir. However, Kardemir Karabuk is 1.34 times more volatile than Iskenderun Demir ve. It trades about 0.15 of its potential returns per unit of risk. Iskenderun Demir ve is currently generating about 0.07 per unit of risk. If you would invest  2,270  in Kardemir Karabuk Demir on September 4, 2024 and sell it today you would earn a total of  486.00  from holding Kardemir Karabuk Demir or generate 21.41% return on investment over 90 days.

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

Kardemir Karabuk Demir  vs.  Iskenderun Demir ve

Kardemir Karabuk Demir

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 11 (%) 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.

Iskenderun Demir

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Iskenderun Demir ve are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Iskenderun Demir may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kardemir Karabuk and Iskenderun Demir

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

The idea behind Kardemir Karabuk Demir and Iskenderun Demir ve 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.