Correlation Between Koc Holding and Bera Holding

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

By analyzing existing cross correlation between Koc Holding AS and Bera Holding AS, you can compare the effects of market volatilities on Koc Holding and Bera Holding 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 Koc Holding with a short position of Bera Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koc Holding and Bera Holding.

Diversification Opportunities for Koc Holding and Bera Holding

0.85

Correlation Coefficient

Koc Holding  Bera Holding

Very poor diversification

The 3 months correlation between Koc and Bera is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Koc Holding AS and Bera Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bera Holding AS and Koc Holding 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 Koc Holding AS are associated (or correlated) with Bera Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bera Holding AS has no effect on the direction of Koc Holding i.e., Koc Holding and Bera Holding go up and down completely randomly.

Pair Corralation between Koc Holding and Bera Holding

Assuming the 90 days trading horizon Koc Holding AS is expected to generate 0.74 times more return on investment than Bera Holding. However, Koc Holding AS is 1.35 times less risky than Bera Holding. It trades about 0.08 of its potential returns per unit of risk. Bera Holding AS is currently generating about 0.02 per unit of risk. If you would invest  7,952  in Koc Holding AS on September 23, 2024 and sell it today you would earn a total of  10,248  from holding Koc Holding AS or generate 128.87% return on investment over 90 days.

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

Koc Holding AS  vs.  Bera Holding AS

Koc Holding AS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bera Holding AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bera Holding AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bera Holding is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Koc Holding and Bera Holding

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

The idea behind Koc Holding AS and Bera Holding AS 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.