Correlation Between Euro Menkul and ICBC Turkey

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

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

Diversification Opportunities for Euro Menkul and ICBC Turkey

0.65

Correlation Coefficient

Euro Menkul  ICBC Turkey

Poor diversification

The 3 months correlation between Euro and ICBC is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Euro Menkul Kiymet 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 Euro Menkul 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 Menkul Kiymet 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 Euro Menkul i.e., Euro Menkul and ICBC Turkey go up and down completely randomly.

Pair Corralation between Euro Menkul and ICBC Turkey

Assuming the 90 days trading horizon Euro Menkul Kiymet is expected to under-perform the ICBC Turkey. In addition to that, Euro Menkul is 1.67 times more volatile than ICBC Turkey Bank. It trades about -0.1 of its total potential returns per unit of risk. ICBC Turkey Bank is currently generating about -0.02 per unit of volatility. If you would invest  1,413  in ICBC Turkey Bank on December 29, 2024 and sell it today you would lose (89.00) from holding ICBC Turkey Bank or give up 6.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Euro Menkul Kiymet  vs.  ICBC Turkey Bank

Euro Menkul Kiymet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Euro Menkul Kiymet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ICBC Turkey Bank

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Euro Menkul and ICBC Turkey

The main advantage of trading using opposite Euro Menkul and ICBC Turkey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euro Menkul 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 Euro Menkul Kiymet 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.