Correlation Between Karsan Otomotiv and Vakif Menkul

Can any of the company-specific risk be diversified away by investing in both Karsan Otomotiv and Vakif Menkul 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 Karsan Otomotiv and Vakif Menkul into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Karsan Otomotiv Sanayi and Vakif Menkul Kiymet, you can compare the effects of market volatilities on Karsan Otomotiv and Vakif Menkul 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 Karsan Otomotiv with a short position of Vakif Menkul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karsan Otomotiv and Vakif Menkul.

Diversification Opportunities for Karsan Otomotiv and Vakif Menkul

-0.35

Correlation Coefficient

Karsan Otomotiv  Vakif Menkul

Very good diversification

The 3 months correlation between Karsan and Vakif is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Karsan Otomotiv Sanayi and Vakif Menkul Kiymet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vakif Menkul Kiymet and Karsan Otomotiv 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 Karsan Otomotiv Sanayi are associated (or correlated) with Vakif Menkul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vakif Menkul Kiymet has no effect on the direction of Karsan Otomotiv i.e., Karsan Otomotiv and Vakif Menkul go up and down completely randomly.

Pair Corralation between Karsan Otomotiv and Vakif Menkul

Assuming the 90 days trading horizon Karsan Otomotiv Sanayi is expected to under-perform the Vakif Menkul. But the stock apears to be less risky and, when comparing its historical volatility, Karsan Otomotiv Sanayi is 1.4 times less risky than Vakif Menkul. The stock trades about -0.12 of its potential returns per unit of risk. The Vakif Menkul Kiymet is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,976  in Vakif Menkul Kiymet on September 23, 2024 and sell it today you would lose (14.00) from holding Vakif Menkul Kiymet or give up 0.71% of portfolio value over 90 days.

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

Karsan Otomotiv Sanayi  vs.  Vakif Menkul Kiymet

Karsan Otomotiv Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Karsan Otomotiv Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Vakif Menkul Kiymet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vakif Menkul Kiymet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Vakif Menkul is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Karsan Otomotiv and Vakif Menkul

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

The idea behind Karsan Otomotiv Sanayi and Vakif Menkul Kiymet 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.