Correlation Between Eregli Demir and Koc Holding

Can any of the company-specific risk be diversified away by investing in both Eregli Demir 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 Eregli Demir and Koc Holding 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 Koc Holding AS, you can compare the effects of market volatilities on Eregli Demir 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 Eregli Demir with a short position of Koc Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eregli Demir and Koc Holding.

Diversification Opportunities for Eregli Demir and Koc Holding

0.68

Correlation Coefficient

Eregli Demir  Koc Holding

Poor diversification

The 3 months correlation between Eregli and Koc is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Eregli Demir 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 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 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 Eregli Demir i.e., Eregli Demir and Koc Holding go up and down completely randomly.

Pair Corralation between Eregli Demir and Koc Holding

Assuming the 90 days trading horizon Eregli Demir ve is expected to generate 0.99 times more return on investment than Koc Holding. However, Eregli Demir ve is 1.01 times less risky than Koc Holding. It trades about -0.04 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  2,460  in Eregli Demir ve on December 30, 2024 and sell it today you would lose (208.00) from holding Eregli Demir ve or give up 8.46% of portfolio value over 90 days.

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

Eregli Demir ve  vs.  Koc Holding AS

Eregli Demir ve

Risk-Adjusted Performance

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 latest uncertain 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.

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 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 Eregli Demir and Koc Holding

The main advantage of trading using opposite Eregli Demir and Koc Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eregli Demir 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 Eregli Demir 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.