Correlation Between Aksa Enerji and Ford Otomotiv

Can any of the company-specific risk be diversified away by investing in both Aksa Enerji and Ford Otomotiv 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 Aksa Enerji and Ford Otomotiv into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Aksa Enerji and Ford Otomotiv

-0.54

Correlation Coefficient

Aksa Enerji  Ford Otomotiv

Excellent diversification

The 3 months correlation between Aksa and Ford is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Aksa Enerji Uretim and Ford Otomotiv Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Otomotiv Sanayi and Aksa Enerji 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 Aksa Enerji Uretim are associated (or correlated) with Ford Otomotiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Otomotiv Sanayi has no effect on the direction of Aksa Enerji i.e., Aksa Enerji and Ford Otomotiv go up and down completely randomly.

Pair Corralation between Aksa Enerji and Ford Otomotiv

Assuming the 90 days trading horizon Aksa Enerji Uretim is expected to generate 1.03 times more return on investment than Ford Otomotiv. However, Aksa Enerji is 1.03 times more volatile than Ford Otomotiv Sanayi. It trades about -0.01 of its potential returns per unit of risk. Ford Otomotiv Sanayi is currently generating about -0.04 per unit of risk. If you would invest  4,300  in Aksa Enerji Uretim on October 20, 2024 and sell it today you would lose (232.00) from holding Aksa Enerji Uretim or give up 5.4% of portfolio value over 90 days.

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

Aksa Enerji Uretim  vs.  Ford Otomotiv Sanayi

Aksa Enerji Uretim

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aksa Enerji Uretim are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Aksa Enerji demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Ford Otomotiv Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aksa Enerji and Ford Otomotiv

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

The idea behind Aksa Enerji Uretim and Ford Otomotiv 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.