Correlation Between Kent Gida and Eregli Demir

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

By analyzing existing cross correlation between Kent Gida Maddeleri and Eregli Demir ve, you can compare the effects of market volatilities on Kent Gida and Eregli Demir 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 Kent Gida with a short position of Eregli Demir. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kent Gida and Eregli Demir.

Diversification Opportunities for Kent Gida and Eregli Demir

0.26

Correlation Coefficient

Kent Gida  Eregli Demir

Modest diversification

The 3 months correlation between Kent and Eregli is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Kent Gida Maddeleri and Eregli Demir ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eregli Demir ve and Kent Gida 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 Kent Gida Maddeleri are associated (or correlated) with Eregli Demir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eregli Demir ve has no effect on the direction of Kent Gida i.e., Kent Gida and Eregli Demir go up and down completely randomly.

Pair Corralation between Kent Gida and Eregli Demir

Assuming the 90 days trading horizon Kent Gida Maddeleri is expected to generate 1.97 times more return on investment than Eregli Demir. However, Kent Gida is 1.97 times more volatile than Eregli Demir ve. It trades about 0.07 of its potential returns per unit of risk. Eregli Demir ve is currently generating about 0.1 per unit of risk. If you would invest  96,700  in Kent Gida Maddeleri on September 15, 2024 and sell it today you would earn a total of  12,700  from holding Kent Gida Maddeleri or generate 13.13% return on investment over 90 days.

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

Kent Gida Maddeleri  vs.  Eregli Demir ve

Kent Gida Maddeleri

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kent Gida Maddeleri are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Kent Gida unveiled solid returns over the last few months and may actually be approaching a breakup point.

Eregli Demir ve

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eregli Demir ve are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Eregli Demir may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kent Gida and Eregli Demir

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

The idea behind Kent Gida Maddeleri and Eregli Demir ve 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.