Correlation Between Ege Endustri and Trabzon Liman

Can any of the company-specific risk be diversified away by investing in both Ege Endustri and Trabzon Liman 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 Trabzon Liman 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 Trabzon Liman Isletmeciligi, you can compare the effects of market volatilities on Ege Endustri and Trabzon Liman 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 Trabzon Liman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ege Endustri and Trabzon Liman.

Diversification Opportunities for Ege Endustri and Trabzon Liman

0.72

Correlation Coefficient

Ege Endustri  Trabzon Liman

Poor diversification

The 3 months correlation between Ege and Trabzon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ege Endustri ve and Trabzon Liman Isletmeciligi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trabzon Liman Isletm 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 Trabzon Liman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trabzon Liman Isletm has no effect on the direction of Ege Endustri i.e., Ege Endustri and Trabzon Liman go up and down completely randomly.

Pair Corralation between Ege Endustri and Trabzon Liman

Assuming the 90 days trading horizon Ege Endustri ve is expected to generate 0.95 times more return on investment than Trabzon Liman. However, Ege Endustri ve is 1.06 times less risky than Trabzon Liman. It trades about -0.03 of its potential returns per unit of risk. Trabzon Liman Isletmeciligi is currently generating about -0.05 per unit of risk. If you would invest  992,750  in Ege Endustri ve on December 28, 2024 and sell it today you would lose (65,250) from holding Ege Endustri ve or give up 6.57% of portfolio value over 90 days.

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

Ege Endustri ve  vs.  Trabzon Liman Isletmeciligi

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.

Trabzon Liman Isletm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trabzon Liman Isletmeciligi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Ege Endustri and Trabzon Liman

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

The idea behind Ege Endustri ve and Trabzon Liman Isletmeciligi 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.