Correlation Between Ihlas Holding and Eregli Demir

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

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

Diversification Opportunities for Ihlas Holding and Eregli Demir

0.64

Correlation Coefficient

Ihlas Holding  Eregli Demir

Poor diversification

The 3 months correlation between Ihlas and Eregli is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ihlas Holding AS 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 Ihlas Holding 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 Ihlas Holding AS 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 Ihlas Holding i.e., Ihlas Holding and Eregli Demir go up and down completely randomly.

Pair Corralation between Ihlas Holding and Eregli Demir

Assuming the 90 days trading horizon Ihlas Holding AS is expected to generate 4.48 times more return on investment than Eregli Demir. However, Ihlas Holding is 4.48 times more volatile than Eregli Demir ve. It trades about 0.28 of its potential returns per unit of risk. Eregli Demir ve is currently generating about -0.37 per unit of risk. If you would invest  320.00  in Ihlas Holding AS on October 12, 2024 and sell it today you would earn a total of  94.00  from holding Ihlas Holding AS or generate 29.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Ihlas Holding AS  vs.  Eregli Demir ve

Ihlas Holding AS

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Ihlas Holding AS are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Ihlas Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Eregli Demir ve

Risk-Adjusted Performance

0 of 100

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 fairly strong forward indicators, Eregli Demir is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ihlas Holding and Eregli Demir

The main advantage of trading using opposite Ihlas Holding and Eregli Demir positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ihlas Holding 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 Ihlas Holding AS 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.