Correlation Between Eregli Demir and Ekiz Kimya

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

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

Diversification Opportunities for Eregli Demir and Ekiz Kimya

0.24

Correlation Coefficient

Eregli Demir  Ekiz Kimya

Modest diversification

The 3 months correlation between Eregli and Ekiz is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Eregli Demir ve and Ekiz Kimya Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekiz Kimya Sanayi and Eregli Demir 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 Eregli Demir ve are associated (or correlated) with Ekiz Kimya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekiz Kimya Sanayi has no effect on the direction of Eregli Demir i.e., Eregli Demir and Ekiz Kimya go up and down completely randomly.

Pair Corralation between Eregli Demir and Ekiz Kimya

Assuming the 90 days trading horizon Eregli Demir ve is expected to under-perform the Ekiz Kimya. But the stock apears to be less risky and, when comparing its historical volatility, Eregli Demir ve is 1.39 times less risky than Ekiz Kimya. The stock trades about -0.01 of its potential returns per unit of risk. The Ekiz Kimya Sanayi is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,650  in Ekiz Kimya Sanayi on October 4, 2024 and sell it today you would lose (10.00) from holding Ekiz Kimya Sanayi or give up 0.18% of portfolio value over 90 days.

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

Eregli Demir ve  vs.  Ekiz Kimya Sanayi

Eregli Demir ve

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ekiz Kimya Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ekiz Kimya Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Eregli Demir and Ekiz Kimya

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

The idea behind Eregli Demir ve and Ekiz Kimya 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.