Correlation Between AG Anadolu and Kocaer Celik

Can any of the company-specific risk be diversified away by investing in both AG Anadolu and Kocaer Celik 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 AG Anadolu and Kocaer Celik into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AG Anadolu Group and Kocaer Celik Sanayi, you can compare the effects of market volatilities on AG Anadolu and Kocaer Celik 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 AG Anadolu with a short position of Kocaer Celik. Check out your portfolio center. Please also check ongoing floating volatility patterns of AG Anadolu and Kocaer Celik.

Diversification Opportunities for AG Anadolu and Kocaer Celik

0.84

Correlation Coefficient

AG Anadolu  Kocaer Celik

Very poor diversification

The 3 months correlation between AGHOL and Kocaer is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding AG Anadolu Group and Kocaer Celik Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kocaer Celik Sanayi and AG Anadolu 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 AG Anadolu Group are associated (or correlated) with Kocaer Celik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kocaer Celik Sanayi has no effect on the direction of AG Anadolu i.e., AG Anadolu and Kocaer Celik go up and down completely randomly.

Pair Corralation between AG Anadolu and Kocaer Celik

Assuming the 90 days trading horizon AG Anadolu Group is expected to generate 1.89 times more return on investment than Kocaer Celik. However, AG Anadolu is 1.89 times more volatile than Kocaer Celik Sanayi. It trades about -0.01 of its potential returns per unit of risk. Kocaer Celik Sanayi is currently generating about -0.04 per unit of risk. If you would invest  33,650  in AG Anadolu Group on October 6, 2024 and sell it today you would lose (800.00) from holding AG Anadolu Group or give up 2.38% of portfolio value over 90 days.

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

AG Anadolu Group  vs.  Kocaer Celik Sanayi

AG Anadolu Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AG Anadolu Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, AG Anadolu may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kocaer Celik Sanayi

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kocaer Celik Sanayi are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kocaer Celik may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AG Anadolu and Kocaer Celik

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

The idea behind AG Anadolu Group and Kocaer Celik Sanayi 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.