Correlation Between Iskenderun Demir and ICBC Turkey

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

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

Diversification Opportunities for Iskenderun Demir and ICBC Turkey

0.79

Correlation Coefficient

Iskenderun Demir  ICBC Turkey

Poor diversification

The 3 months correlation between Iskenderun and ICBC is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Iskenderun Demir ve 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 Iskenderun Demir 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 Iskenderun Demir ve 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 Iskenderun Demir i.e., Iskenderun Demir and ICBC Turkey go up and down completely randomly.

Pair Corralation between Iskenderun Demir and ICBC Turkey

Assuming the 90 days trading horizon Iskenderun Demir ve is expected to under-perform the ICBC Turkey. But the stock apears to be less risky and, when comparing its historical volatility, Iskenderun Demir ve is 1.98 times less risky than ICBC Turkey. The stock trades about -0.1 of its potential returns per unit of risk. The ICBC Turkey Bank is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,533  in ICBC Turkey Bank on October 8, 2024 and sell it today you would lose (18.00) from holding ICBC Turkey Bank or give up 1.17% of portfolio value over 90 days.

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

Iskenderun Demir ve  vs.  ICBC Turkey Bank

Iskenderun Demir

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iskenderun Demir ve are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Iskenderun Demir demonstrated solid returns over the last few months and may actually be approaching a breakup point.

ICBC Turkey Bank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ICBC Turkey Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, ICBC Turkey demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iskenderun Demir and ICBC Turkey

The main advantage of trading using opposite Iskenderun Demir and ICBC Turkey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iskenderun Demir 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 Iskenderun Demir ve 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 CEOs Directory module to screen CEOs from public companies around the world.