Correlation Between Sodas Sodyum and ICBC Turkey

Can any of the company-specific risk be diversified away by investing in both Sodas Sodyum and ICBC Turkey 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 Sodas Sodyum and ICBC Turkey into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sodas Sodyum Sanayi and ICBC Turkey Bank, you can compare the effects of market volatilities on Sodas Sodyum and ICBC Turkey 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 Sodas Sodyum with a short position of ICBC Turkey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sodas Sodyum and ICBC Turkey.

Diversification Opportunities for Sodas Sodyum and ICBC Turkey

-0.05

Correlation Coefficient

Sodas Sodyum  ICBC Turkey

Good diversification

The 3 months correlation between Sodas and ICBC is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sodas Sodyum Sanayi and ICBC Turkey Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICBC Turkey Bank and Sodas Sodyum 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 Sodas Sodyum Sanayi are associated (or correlated) with ICBC Turkey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICBC Turkey Bank has no effect on the direction of Sodas Sodyum i.e., Sodas Sodyum and ICBC Turkey go up and down completely randomly.

Pair Corralation between Sodas Sodyum and ICBC Turkey

Assuming the 90 days trading horizon Sodas Sodyum Sanayi is expected to under-perform the ICBC Turkey. In addition to that, Sodas Sodyum is 1.17 times more volatile than ICBC Turkey Bank. It trades about -0.1 of its total potential returns per unit of risk. ICBC Turkey Bank is currently generating about 0.03 per unit of volatility. If you would invest  1,367  in ICBC Turkey Bank on September 14, 2024 and sell it today you would earn a total of  38.00  from holding ICBC Turkey Bank or generate 2.78% return on investment over 90 days.

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

Sodas Sodyum Sanayi  vs.  ICBC Turkey Bank

Sodas Sodyum Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sodas Sodyum Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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.

ICBC Turkey Bank

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICBC Turkey Bank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, ICBC Turkey is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sodas Sodyum and ICBC Turkey

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

The idea behind Sodas Sodyum Sanayi and ICBC Turkey Bank 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.