Correlation Between Gentas Genel and Kocaer Celik

Can any of the company-specific risk be diversified away by investing in both Gentas Genel and Kocaer Celik 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 Gentas Genel and Kocaer Celik into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gentas Genel Metal and Kocaer Celik Sanayi, you can compare the effects of market volatilities on Gentas Genel and Kocaer Celik 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 Gentas Genel with a short position of Kocaer Celik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentas Genel and Kocaer Celik.

Diversification Opportunities for Gentas Genel and Kocaer Celik

0.88

Correlation Coefficient

Gentas Genel  Kocaer Celik

Very poor diversification

The 3 months correlation between Gentas and Kocaer is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Gentas Genel Metal and Kocaer Celik Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kocaer Celik Sanayi and Gentas Genel 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 Gentas Genel Metal are associated (or correlated) with Kocaer Celik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kocaer Celik Sanayi has no effect on the direction of Gentas Genel i.e., Gentas Genel and Kocaer Celik go up and down completely randomly.

Pair Corralation between Gentas Genel and Kocaer Celik

Assuming the 90 days trading horizon Gentas Genel is expected to generate 2.15 times less return on investment than Kocaer Celik. But when comparing it to its historical volatility, Gentas Genel Metal is 3.2 times less risky than Kocaer Celik. It trades about 0.07 of its potential returns per unit of risk. Kocaer Celik Sanayi is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  581.00  in Kocaer Celik Sanayi on October 4, 2024 and sell it today you would earn a total of  804.00  from holding Kocaer Celik Sanayi or generate 138.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.19%
Values	Daily Returns

Gentas Genel Metal  vs.  Kocaer Celik Sanayi

Gentas Genel Metal

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gentas Genel Metal are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Gentas Genel demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Kocaer Celik Sanayi

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kocaer Celik Sanayi are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kocaer Celik may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gentas Genel and Kocaer Celik

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

The idea behind Gentas Genel Metal and Kocaer Celik 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.