Correlation Between Akbank Turk and WuXi AppTec

Can any of the company-specific risk be diversified away by investing in both Akbank Turk and WuXi AppTec 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 Akbank Turk and WuXi AppTec into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Akbank Turk Anonim and WuXi AppTec Co, you can compare the effects of market volatilities on Akbank Turk and WuXi AppTec 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 Akbank Turk with a short position of WuXi AppTec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akbank Turk and WuXi AppTec.

Diversification Opportunities for Akbank Turk and WuXi AppTec

0.75

Correlation Coefficient

Akbank Turk  WuXi AppTec

Poor diversification

The 3 months correlation between Akbank and WuXi is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Akbank Turk Anonim and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec and Akbank Turk 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 Akbank Turk Anonim are associated (or correlated) with WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of Akbank Turk i.e., Akbank Turk and WuXi AppTec go up and down completely randomly.

Pair Corralation between Akbank Turk and WuXi AppTec

Assuming the 90 days horizon Akbank Turk Anonim is expected to generate 6.85 times more return on investment than WuXi AppTec. However, Akbank Turk is 6.85 times more volatile than WuXi AppTec Co. It trades about 0.2 of its potential returns per unit of risk. WuXi AppTec Co is currently generating about -0.23 per unit of risk. If you would invest  355.00  in Akbank Turk Anonim on October 25, 2024 and sell it today you would earn a total of  35.00  from holding Akbank Turk Anonim or generate 9.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Akbank Turk Anonim  vs.  WuXi AppTec Co

Akbank Turk Anonim

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Akbank Turk Anonim are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Akbank Turk showed solid returns over the last few months and may actually be approaching a breakup point.

WuXi AppTec

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WuXi AppTec Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward indicators, WuXi AppTec reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Akbank Turk and WuXi AppTec

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

The idea behind Akbank Turk Anonim and WuXi AppTec Co 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.