Correlation Between Koc Holding and ICBC Turkey

Can any of the company-specific risk be diversified away by investing in both Koc Holding and ICBC Turkey 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 ICBC Turkey 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 ICBC Turkey Bank, you can compare the effects of market volatilities on Koc Holding and ICBC Turkey 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 ICBC Turkey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koc Holding and ICBC Turkey.

Diversification Opportunities for Koc Holding and ICBC Turkey

0.71

Correlation Coefficient

Koc Holding  ICBC Turkey

Poor diversification

The 3 months correlation between Koc and ICBC is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Koc Holding AS and ICBC Turkey Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICBC Turkey Bank 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 ICBC Turkey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICBC Turkey Bank has no effect on the direction of Koc Holding i.e., Koc Holding and ICBC Turkey go up and down completely randomly.

Pair Corralation between Koc Holding and ICBC Turkey

Assuming the 90 days trading horizon Koc Holding is expected to generate 3.15 times less return on investment than ICBC Turkey. But when comparing it to its historical volatility, Koc Holding AS is 1.11 times less risky than ICBC Turkey. It trades about 0.04 of its potential returns per unit of risk. ICBC Turkey Bank is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,221  in ICBC Turkey Bank on October 5, 2024 and sell it today you would earn a total of  201.00  from holding ICBC Turkey Bank or generate 16.46% return on investment over 90 days.

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

Koc Holding AS  vs.  ICBC Turkey Bank

Koc Holding AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Koc Holding AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

ICBC Turkey Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ICBC Turkey Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, ICBC Turkey demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Koc Holding and ICBC Turkey

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

The idea behind Koc Holding AS and ICBC Turkey Bank 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.