Correlation Between Escort Teknoloji and ICBC Turkey

Can any of the company-specific risk be diversified away by investing in both Escort Teknoloji and ICBC Turkey 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 Escort Teknoloji and ICBC Turkey into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Escort Teknoloji Yatirim and ICBC Turkey Bank, you can compare the effects of market volatilities on Escort Teknoloji and ICBC Turkey 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 Escort Teknoloji with a short position of ICBC Turkey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Escort Teknoloji and ICBC Turkey.

Diversification Opportunities for Escort Teknoloji and ICBC Turkey

0.67

Correlation Coefficient

Escort Teknoloji  ICBC Turkey

Poor diversification

The 3 months correlation between Escort and ICBC is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Escort Teknoloji Yatirim and ICBC Turkey Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICBC Turkey Bank and Escort Teknoloji 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 Escort Teknoloji Yatirim are associated (or correlated) with ICBC Turkey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICBC Turkey Bank has no effect on the direction of Escort Teknoloji i.e., Escort Teknoloji and ICBC Turkey go up and down completely randomly.

Pair Corralation between Escort Teknoloji and ICBC Turkey

Assuming the 90 days trading horizon Escort Teknoloji Yatirim is expected to generate 1.32 times more return on investment than ICBC Turkey. However, Escort Teknoloji is 1.32 times more volatile than ICBC Turkey Bank. It trades about 0.07 of its potential returns per unit of risk. ICBC Turkey Bank is currently generating about 0.07 per unit of risk. If you would invest  5,260  in Escort Teknoloji Yatirim on October 24, 2024 and sell it today you would earn a total of  170.00  from holding Escort Teknoloji Yatirim or generate 3.23% return on investment over 90 days.

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

Escort Teknoloji Yatirim  vs.  ICBC Turkey Bank

Escort Teknoloji Yatirim

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Escort Teknoloji Yatirim are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Escort Teknoloji is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

ICBC Turkey Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ICBC Turkey Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, ICBC Turkey may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Escort Teknoloji and ICBC Turkey

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

The idea behind Escort Teknoloji Yatirim and ICBC Turkey Bank 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.