Correlation Between Kocaer Celik and Turkiye Garanti

Can any of the company-specific risk be diversified away by investing in both Kocaer Celik and Turkiye Garanti 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 Turkiye Garanti 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 Turkiye Garanti Bankasi, you can compare the effects of market volatilities on Kocaer Celik and Turkiye Garanti 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 Turkiye Garanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kocaer Celik and Turkiye Garanti.

Diversification Opportunities for Kocaer Celik and Turkiye Garanti

0.75

Correlation Coefficient

Kocaer Celik  Turkiye Garanti

Poor diversification

The 3 months correlation between Kocaer and Turkiye is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kocaer Celik Sanayi and Turkiye Garanti Bankasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkiye Garanti Bankasi 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 Turkiye Garanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turkiye Garanti Bankasi has no effect on the direction of Kocaer Celik i.e., Kocaer Celik and Turkiye Garanti go up and down completely randomly.

Pair Corralation between Kocaer Celik and Turkiye Garanti

Assuming the 90 days trading horizon Kocaer Celik Sanayi is expected to generate 3.61 times more return on investment than Turkiye Garanti. However, Kocaer Celik is 3.61 times more volatile than Turkiye Garanti Bankasi. It trades about 0.05 of its potential returns per unit of risk. Turkiye Garanti Bankasi is currently generating about 0.13 per unit of risk. If you would invest  594.00  in Kocaer Celik Sanayi on October 5, 2024 and sell it today you would earn a total of  791.00  from holding Kocaer Celik Sanayi or generate 133.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

Kocaer Celik Sanayi  vs.  Turkiye Garanti Bankasi

Kocaer Celik Sanayi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kocaer Celik Sanayi are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kocaer Celik may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Turkiye Garanti Bankasi

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Turkiye Garanti Bankasi are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Turkiye Garanti demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kocaer Celik and Turkiye Garanti

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

The idea behind Kocaer Celik Sanayi and Turkiye Garanti Bankasi 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.