Correlation Between Dogus Otomotiv and Izmir Demir

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

By analyzing existing cross correlation between Dogus Otomotiv Servis and Izmir Demir Celik, you can compare the effects of market volatilities on Dogus Otomotiv and Izmir Demir 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 Dogus Otomotiv with a short position of Izmir Demir. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dogus Otomotiv and Izmir Demir.

Diversification Opportunities for Dogus Otomotiv and Izmir Demir

0.25

Correlation Coefficient

Dogus Otomotiv  Izmir Demir

Modest diversification

The 3 months correlation between Dogus and Izmir is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dogus Otomotiv Servis and Izmir Demir Celik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Izmir Demir Celik and Dogus Otomotiv 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 Dogus Otomotiv Servis are associated (or correlated) with Izmir Demir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Izmir Demir Celik has no effect on the direction of Dogus Otomotiv i.e., Dogus Otomotiv and Izmir Demir go up and down completely randomly.

Pair Corralation between Dogus Otomotiv and Izmir Demir

Assuming the 90 days trading horizon Dogus Otomotiv Servis is expected to generate 1.01 times more return on investment than Izmir Demir. However, Dogus Otomotiv is 1.01 times more volatile than Izmir Demir Celik. It trades about 0.04 of its potential returns per unit of risk. Izmir Demir Celik is currently generating about 0.01 per unit of risk. If you would invest  14,019  in Dogus Otomotiv Servis on September 24, 2024 and sell it today you would earn a total of  6,101  from holding Dogus Otomotiv Servis or generate 43.52% return on investment over 90 days.

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

Dogus Otomotiv Servis  vs.  Izmir Demir Celik

Dogus Otomotiv Servis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dogus Otomotiv Servis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Izmir Demir Celik

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Izmir Demir Celik are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Izmir Demir is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Dogus Otomotiv and Izmir Demir

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

The idea behind Dogus Otomotiv Servis and Izmir Demir Celik 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.