Correlation Between Kent Gida and Vakif Finansal

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

Diversification Opportunities for Kent Gida and Vakif Finansal

0.74

Correlation Coefficient

Kent Gida  Vakif Finansal

Poor diversification

The 3 months correlation between Kent and Vakif is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Kent Gida Maddeleri and Vakif Finansal Kiralama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vakif Finansal Kiralama 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 Vakif Finansal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vakif Finansal Kiralama has no effect on the direction of Kent Gida i.e., Kent Gida and Vakif Finansal go up and down completely randomly.

Pair Corralation between Kent Gida and Vakif Finansal

Assuming the 90 days trading horizon Kent Gida Maddeleri is expected to generate 1.8 times more return on investment than Vakif Finansal. However, Kent Gida is 1.8 times more volatile than Vakif Finansal Kiralama. It trades about 0.2 of its potential returns per unit of risk. Vakif Finansal Kiralama is currently generating about 0.21 per unit of risk. If you would invest  87,850  in Kent Gida Maddeleri on September 23, 2024 and sell it today you would earn a total of  17,450  from holding Kent Gida Maddeleri or generate 19.86% return on investment over 90 days.

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

Kent Gida Maddeleri  vs.  Vakif Finansal Kiralama

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.

Vakif Finansal Kiralama

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vakif Finansal Kiralama are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Vakif Finansal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kent Gida and Vakif Finansal

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

The idea behind Kent Gida Maddeleri and Vakif Finansal Kiralama 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.