Correlation Between International Business and Zorlu Enerji

Can any of the company-specific risk be diversified away by investing in both International Business and Zorlu Enerji 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 International Business and Zorlu Enerji into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between International Business Machines and Zorlu Enerji Elektrik, you can compare the effects of market volatilities on International Business and Zorlu Enerji 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 International Business with a short position of Zorlu Enerji. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Zorlu Enerji.

Diversification Opportunities for International Business and Zorlu Enerji

0.19

Correlation Coefficient

International Business  Zorlu Enerji

Average diversification

The 3 months correlation between International and Zorlu is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Zorlu Enerji Elektrik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zorlu Enerji Elektrik and International Business 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 International Business Machines are associated (or correlated) with Zorlu Enerji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zorlu Enerji Elektrik has no effect on the direction of International Business i.e., International Business and Zorlu Enerji go up and down completely randomly.

Pair Corralation between International Business and Zorlu Enerji

Considering the 90-day investment horizon International Business is expected to generate 1.21 times less return on investment than Zorlu Enerji. But when comparing it to its historical volatility, International Business Machines is 3.38 times less risky than Zorlu Enerji. It trades about 0.08 of its potential returns per unit of risk. Zorlu Enerji Elektrik is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  358.00  in Zorlu Enerji Elektrik on October 4, 2024 and sell it today you would earn a total of  85.00  from holding Zorlu Enerji Elektrik or generate 23.74% return on investment over 90 days.

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

International Business Machine  vs.  Zorlu Enerji Elektrik

International Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Business Machines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, International Business is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Zorlu Enerji Elektrik

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with International Business and Zorlu Enerji

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

The idea behind International Business Machines and Zorlu Enerji Elektrik 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.