Correlation Between Ege Endustri and Koc Holding

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

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

Diversification Opportunities for Ege Endustri and Koc Holding

0.89

Correlation Coefficient

Ege Endustri  Koc Holding

Very poor diversification

The 3 months correlation between Ege and Koc is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ege Endustri ve and Koc Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koc Holding AS and Ege Endustri 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 Ege Endustri ve are associated (or correlated) with Koc Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koc Holding AS has no effect on the direction of Ege Endustri i.e., Ege Endustri and Koc Holding go up and down completely randomly.

Pair Corralation between Ege Endustri and Koc Holding

Assuming the 90 days trading horizon Ege Endustri ve is expected to generate 0.92 times more return on investment than Koc Holding. However, Ege Endustri ve is 1.08 times less risky than Koc Holding. It trades about -0.02 of its potential returns per unit of risk. Koc Holding AS is currently generating about -0.04 per unit of risk. If you would invest  992,250  in Ege Endustri ve on December 26, 2024 and sell it today you would lose (52,250) from holding Ege Endustri ve or give up 5.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Ege Endustri ve  vs.  Koc Holding AS

Ege Endustri ve

Risk-Adjusted Performance

Very Weak

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

Koc Holding AS

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ege Endustri and Koc Holding

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

The idea behind Ege Endustri ve and Koc Holding AS 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.