Correlation Between Deva Holding and Gubre Fabrikalari

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

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

Diversification Opportunities for Deva Holding and Gubre Fabrikalari

0.83

Correlation Coefficient

Deva Holding  Gubre Fabrikalari

Very poor diversification

The 3 months correlation between Deva and Gubre is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Deva Holding AS and Gubre Fabrikalari TAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gubre Fabrikalari TAS and Deva 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 Deva Holding AS are associated (or correlated) with Gubre Fabrikalari. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gubre Fabrikalari TAS has no effect on the direction of Deva Holding i.e., Deva Holding and Gubre Fabrikalari go up and down completely randomly.

Pair Corralation between Deva Holding and Gubre Fabrikalari

Assuming the 90 days trading horizon Deva Holding is expected to generate 10.54 times less return on investment than Gubre Fabrikalari. But when comparing it to its historical volatility, Deva Holding AS is 1.22 times less risky than Gubre Fabrikalari. It trades about 0.01 of its potential returns per unit of risk. Gubre Fabrikalari TAS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  15,380  in Gubre Fabrikalari TAS on September 24, 2024 and sell it today you would earn a total of  12,720  from holding Gubre Fabrikalari TAS or generate 82.7% return on investment over 90 days.

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

Deva Holding AS  vs.  Gubre Fabrikalari TAS

Deva Holding AS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deva Holding AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Deva Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gubre Fabrikalari TAS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gubre Fabrikalari TAS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Gubre Fabrikalari demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deva Holding and Gubre Fabrikalari

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

The idea behind Deva Holding AS and Gubre Fabrikalari TAS 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.