Correlation Between Koc Holding and Sekerbank TAS

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

Diversification Opportunities for Koc Holding and Sekerbank TAS

0.67

Correlation Coefficient

Koc Holding  Sekerbank TAS

Poor diversification

The 3 months correlation between Koc and Sekerbank is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Koc Holding AS and Sekerbank TAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekerbank TAS 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 Sekerbank TAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekerbank TAS has no effect on the direction of Koc Holding i.e., Koc Holding and Sekerbank TAS go up and down completely randomly.

Pair Corralation between Koc Holding and Sekerbank TAS

Assuming the 90 days trading horizon Koc Holding is expected to generate 1.52 times less return on investment than Sekerbank TAS. But when comparing it to its historical volatility, Koc Holding AS is 1.28 times less risky than Sekerbank TAS. It trades about 0.19 of its potential returns per unit of risk. Sekerbank TAS is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  397.00  in Sekerbank TAS on October 6, 2024 and sell it today you would earn a total of  96.00  from holding Sekerbank TAS or generate 24.18% 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.  Sekerbank TAS

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.

Sekerbank TAS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sekerbank TAS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Sekerbank TAS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Koc Holding and Sekerbank TAS

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

The idea behind Koc Holding AS and Sekerbank TAS 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.