Correlation Between Verusa Holding and ICBC Turkey

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

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

Diversification Opportunities for Verusa Holding and ICBC Turkey

-0.5

Correlation Coefficient

Verusa Holding  ICBC Turkey

Very good diversification

The 3 months correlation between Verusa and ICBC is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Verusa Holding AS 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 Verusa Holding 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 Verusa Holding AS 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 Verusa Holding i.e., Verusa Holding and ICBC Turkey go up and down completely randomly.

Pair Corralation between Verusa Holding and ICBC Turkey

Assuming the 90 days trading horizon Verusa Holding AS is expected to under-perform the ICBC Turkey. In addition to that, Verusa Holding is 1.0 times more volatile than ICBC Turkey Bank. It trades about -0.12 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  1,376  in ICBC Turkey Bank on September 24, 2024 and sell it today you would earn a total of  39.00  from holding ICBC Turkey Bank or generate 2.83% return on investment over 90 days.

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

Verusa Holding AS  vs.  ICBC Turkey Bank

Verusa Holding AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verusa Holding AS 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.

ICBC Turkey Bank

Risk-Adjusted Performance

2 of 100

Weak

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 newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Verusa Holding and ICBC Turkey

The main advantage of trading using opposite Verusa Holding and ICBC Turkey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verusa Holding 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 Verusa Holding AS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.