Correlation Between Euro Kapital and Eregli Demir

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

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

Diversification Opportunities for Euro Kapital and Eregli Demir

0.35

Correlation Coefficient

Euro Kapital  Eregli Demir

Weak diversification

The 3 months correlation between Euro and Eregli is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Euro Kapital Yatirim and Eregli Demir ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eregli Demir ve and Euro Kapital 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 Euro Kapital Yatirim are associated (or correlated) with Eregli Demir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eregli Demir ve has no effect on the direction of Euro Kapital i.e., Euro Kapital and Eregli Demir go up and down completely randomly.

Pair Corralation between Euro Kapital and Eregli Demir

Assuming the 90 days trading horizon Euro Kapital Yatirim is expected to generate 2.24 times more return on investment than Eregli Demir. However, Euro Kapital is 2.24 times more volatile than Eregli Demir ve. It trades about -0.01 of its potential returns per unit of risk. Eregli Demir ve is currently generating about -0.13 per unit of risk. If you would invest  1,256  in Euro Kapital Yatirim on November 28, 2024 and sell it today you would lose (68.00) from holding Euro Kapital Yatirim or give up 5.41% of portfolio value over 90 days.

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

Euro Kapital Yatirim  vs.  Eregli Demir ve

Euro Kapital Yatirim

Risk-Adjusted Performance

Very Weak

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

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 uncertain performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Euro Kapital and Eregli Demir

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

The idea behind Euro Kapital Yatirim and Eregli Demir ve 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.