Correlation Between IZDEMIR Enerji and DO AG

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

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

Diversification Opportunities for IZDEMIR Enerji and DO AG

0.34

Correlation Coefficient

IZDEMIR Enerji  DO AG

Weak diversification

The 3 months correlation between IZDEMIR and DOCO is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding IZDEMIR Enerji Elektrik and DO AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DO AG and IZDEMIR Enerji 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 IZDEMIR Enerji Elektrik are associated (or correlated) with DO AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DO AG has no effect on the direction of IZDEMIR Enerji i.e., IZDEMIR Enerji and DO AG go up and down completely randomly.

Pair Corralation between IZDEMIR Enerji and DO AG

Assuming the 90 days trading horizon IZDEMIR Enerji is expected to generate 3.72 times less return on investment than DO AG. But when comparing it to its historical volatility, IZDEMIR Enerji Elektrik is 1.45 times less risky than DO AG. It trades about 0.08 of its potential returns per unit of risk. DO AG is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  563,000  in DO AG on September 15, 2024 and sell it today you would earn a total of  64,000  from holding DO AG or generate 11.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

IZDEMIR Enerji Elektrik  vs.  DO AG

IZDEMIR Enerji Elektrik

Risk-Adjusted Performance

4 of 100

Insignificant

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

DO AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DO AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, DO AG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IZDEMIR Enerji and DO AG

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

The idea behind IZDEMIR Enerji Elektrik and DO AG 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.