Correlation Between Izmir Demir and Koza Anadolu

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

By analyzing existing cross correlation between Izmir Demir Celik and Koza Anadolu Metal, you can compare the effects of market volatilities on Izmir Demir and Koza Anadolu 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 Izmir Demir with a short position of Koza Anadolu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Izmir Demir and Koza Anadolu.

Diversification Opportunities for Izmir Demir and Koza Anadolu

0.4

Correlation Coefficient

Izmir Demir  Koza Anadolu

Very weak diversification

The 3 months correlation between Izmir and Koza is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Izmir Demir Celik and Koza Anadolu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koza Anadolu Metal and Izmir 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 Izmir Demir Celik are associated (or correlated) with Koza Anadolu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koza Anadolu Metal has no effect on the direction of Izmir Demir i.e., Izmir Demir and Koza Anadolu go up and down completely randomly.

Pair Corralation between Izmir Demir and Koza Anadolu

Assuming the 90 days trading horizon Izmir Demir Celik is expected to under-perform the Koza Anadolu. But the stock apears to be less risky and, when comparing its historical volatility, Izmir Demir Celik is 1.31 times less risky than Koza Anadolu. The stock trades about -0.22 of its potential returns per unit of risk. The Koza Anadolu Metal is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  7,130  in Koza Anadolu Metal on October 8, 2024 and sell it today you would lose (35.00) from holding Koza Anadolu Metal or give up 0.49% of portfolio value over 90 days.

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

Izmir Demir Celik  vs.  Koza Anadolu Metal

Izmir Demir Celik

Risk-Adjusted Performance

4 of 100

Insignificant

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

Koza Anadolu Metal

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Koza Anadolu Metal are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Koza Anadolu demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Izmir Demir and Koza Anadolu

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

The idea behind Izmir Demir Celik and Koza Anadolu Metal 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.