Correlation Between Mercan Kimya and Galata Wind

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

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

Diversification Opportunities for Mercan Kimya and Galata Wind

-0.65

Correlation Coefficient

Mercan Kimya  Galata Wind

Excellent diversification

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

Pair Corralation between Mercan Kimya and Galata Wind

Assuming the 90 days trading horizon Mercan Kimya Sanayi is expected to under-perform the Galata Wind. In addition to that, Mercan Kimya is 1.02 times more volatile than Galata Wind Enerji. It trades about -0.04 of its total potential returns per unit of risk. Galata Wind Enerji is currently generating about 0.08 per unit of volatility. If you would invest  2,694  in Galata Wind Enerji on September 23, 2024 and sell it today you would earn a total of  276.00  from holding Galata Wind Enerji or generate 10.24% return on investment over 90 days.

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

Mercan Kimya Sanayi  vs.  Galata Wind Enerji

Mercan Kimya Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Galata Wind Enerji

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Mercan Kimya and Galata Wind

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

The idea behind Mercan Kimya Sanayi and Galata Wind Enerji 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.