Correlation Between Ekiz Kimya and IZDEMIR Enerji

Can any of the company-specific risk be diversified away by investing in both Ekiz Kimya and IZDEMIR Enerji 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 Ekiz Kimya and IZDEMIR Enerji into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ekiz Kimya Sanayi and IZDEMIR Enerji Elektrik, you can compare the effects of market volatilities on Ekiz Kimya and IZDEMIR Enerji 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 Ekiz Kimya with a short position of IZDEMIR Enerji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ekiz Kimya and IZDEMIR Enerji.

Diversification Opportunities for Ekiz Kimya and IZDEMIR Enerji

0.59

Correlation Coefficient

Ekiz Kimya  IZDEMIR Enerji

Very weak diversification

The 3 months correlation between Ekiz and IZDEMIR is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ekiz Kimya Sanayi and IZDEMIR Enerji Elektrik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IZDEMIR Enerji Elektrik and Ekiz Kimya 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 Ekiz Kimya Sanayi are associated (or correlated) with IZDEMIR Enerji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IZDEMIR Enerji Elektrik has no effect on the direction of Ekiz Kimya i.e., Ekiz Kimya and IZDEMIR Enerji go up and down completely randomly.

Pair Corralation between Ekiz Kimya and IZDEMIR Enerji

Assuming the 90 days trading horizon Ekiz Kimya is expected to generate 4.21 times less return on investment than IZDEMIR Enerji. But when comparing it to its historical volatility, Ekiz Kimya Sanayi is 1.2 times less risky than IZDEMIR Enerji. It trades about 0.04 of its potential returns per unit of risk. IZDEMIR Enerji Elektrik is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  408.00  in IZDEMIR Enerji Elektrik on October 10, 2024 and sell it today you would earn a total of  91.00  from holding IZDEMIR Enerji Elektrik or generate 22.3% return on investment over 90 days.

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

Ekiz Kimya Sanayi  vs.  IZDEMIR Enerji Elektrik

Ekiz Kimya Sanayi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ekiz Kimya Sanayi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ekiz Kimya is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

IZDEMIR Enerji Elektrik

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IZDEMIR Enerji Elektrik are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, IZDEMIR Enerji demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ekiz Kimya and IZDEMIR Enerji

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

The idea behind Ekiz Kimya Sanayi and IZDEMIR Enerji Elektrik 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.