Correlation Between Deva Holding and Vestel Elektronik

Can any of the company-specific risk be diversified away by investing in both Deva Holding and Vestel Elektronik 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 Vestel Elektronik 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 Vestel Elektronik Sanayi, you can compare the effects of market volatilities on Deva Holding and Vestel Elektronik 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 Vestel Elektronik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deva Holding and Vestel Elektronik.

Diversification Opportunities for Deva Holding and Vestel Elektronik

0.93

Correlation Coefficient

Deva Holding  Vestel Elektronik

Almost no diversification

The 3 months correlation between Deva and Vestel is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Deva Holding AS and Vestel Elektronik Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestel Elektronik Sanayi 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 Vestel Elektronik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestel Elektronik Sanayi has no effect on the direction of Deva Holding i.e., Deva Holding and Vestel Elektronik go up and down completely randomly.

Pair Corralation between Deva Holding and Vestel Elektronik

Assuming the 90 days trading horizon Deva Holding AS is expected to generate 0.89 times more return on investment than Vestel Elektronik. However, Deva Holding AS is 1.12 times less risky than Vestel Elektronik. It trades about 0.04 of its potential returns per unit of risk. Vestel Elektronik Sanayi is currently generating about 0.02 per unit of risk. If you would invest  5,284  in Deva Holding AS on October 13, 2024 and sell it today you would earn a total of  2,456  from holding Deva Holding AS or generate 46.48% return on investment over 90 days.

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

Deva Holding AS  vs.  Vestel Elektronik Sanayi

Deva Holding AS

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deva Holding AS are ranked lower than 12 (%) 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.

Vestel Elektronik Sanayi

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vestel Elektronik Sanayi are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Vestel Elektronik demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deva Holding and Vestel Elektronik

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

The idea behind Deva Holding AS and Vestel Elektronik 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.