Correlation Between Gentas Genel and Vakif Finansal

Can any of the company-specific risk be diversified away by investing in both Gentas Genel and Vakif Finansal 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 Vakif Finansal 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 Vakif Finansal Kiralama, you can compare the effects of market volatilities on Gentas Genel and Vakif Finansal 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 Vakif Finansal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentas Genel and Vakif Finansal.

Diversification Opportunities for Gentas Genel and Vakif Finansal

0.82

Correlation Coefficient

Gentas Genel  Vakif Finansal

Very poor diversification

The 3 months correlation between Gentas and Vakif is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Gentas Genel Metal and Vakif Finansal Kiralama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vakif Finansal Kiralama 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 Vakif Finansal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vakif Finansal Kiralama has no effect on the direction of Gentas Genel i.e., Gentas Genel and Vakif Finansal go up and down completely randomly.

Pair Corralation between Gentas Genel and Vakif Finansal

Assuming the 90 days trading horizon Gentas Genel Metal is expected to generate 0.66 times more return on investment than Vakif Finansal. However, Gentas Genel Metal is 1.52 times less risky than Vakif Finansal. It trades about 0.34 of its potential returns per unit of risk. Vakif Finansal Kiralama is currently generating about 0.21 per unit of risk. If you would invest  837.00  in Gentas Genel Metal on September 23, 2024 and sell it today you would earn a total of  106.00  from holding Gentas Genel Metal or generate 12.66% return on investment over 90 days.

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

Gentas Genel Metal  vs.  Vakif Finansal Kiralama

Gentas Genel Metal

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gentas Genel Metal are ranked lower than 9 (%) 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.

Vakif Finansal Kiralama

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vakif Finansal Kiralama are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Vakif Finansal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gentas Genel and Vakif Finansal

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

The idea behind Gentas Genel Metal and Vakif Finansal Kiralama 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.