Correlation Between Kocaer Celik and Cimentas Izmir

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

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

Diversification Opportunities for Kocaer Celik and Cimentas Izmir

0.87

Correlation Coefficient

Kocaer Celik  Cimentas Izmir

Very poor diversification

The 3 months correlation between Kocaer and Cimentas is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kocaer Celik Sanayi and Cimentas Izmir Cimento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cimentas Izmir Cimento and Kocaer Celik 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 Kocaer Celik Sanayi are associated (or correlated) with Cimentas Izmir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cimentas Izmir Cimento has no effect on the direction of Kocaer Celik i.e., Kocaer Celik and Cimentas Izmir go up and down completely randomly.

Pair Corralation between Kocaer Celik and Cimentas Izmir

Assuming the 90 days trading horizon Kocaer Celik Sanayi is expected to under-perform the Cimentas Izmir. But the stock apears to be less risky and, when comparing its historical volatility, Kocaer Celik Sanayi is 1.63 times less risky than Cimentas Izmir. The stock trades about -0.29 of its potential returns per unit of risk. The Cimentas Izmir Cimento is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  37,987  in Cimentas Izmir Cimento on December 2, 2024 and sell it today you would lose (987.00) from holding Cimentas Izmir Cimento or give up 2.6% of portfolio value over 90 days.

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

Kocaer Celik Sanayi  vs.  Cimentas Izmir Cimento

Kocaer Celik Sanayi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kocaer Celik 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 April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Cimentas Izmir Cimento

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Kocaer Celik and Cimentas Izmir

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

The idea behind Kocaer Celik Sanayi and Cimentas Izmir Cimento 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.