Correlation Between Koza Anadolu and Birlik Mensucat

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

By analyzing existing cross correlation between Koza Anadolu Metal and Birlik Mensucat Ticaret, you can compare the effects of market volatilities on Koza Anadolu and Birlik Mensucat 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 Koza Anadolu with a short position of Birlik Mensucat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koza Anadolu and Birlik Mensucat.

Diversification Opportunities for Koza Anadolu and Birlik Mensucat

0.64

Correlation Coefficient

Koza Anadolu  Birlik Mensucat

Poor diversification

The 3 months correlation between Koza and Birlik is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Koza Anadolu Metal and Birlik Mensucat Ticaret in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birlik Mensucat Ticaret and Koza Anadolu 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 Koza Anadolu Metal are associated (or correlated) with Birlik Mensucat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birlik Mensucat Ticaret has no effect on the direction of Koza Anadolu i.e., Koza Anadolu and Birlik Mensucat go up and down completely randomly.

Pair Corralation between Koza Anadolu and Birlik Mensucat

Assuming the 90 days trading horizon Koza Anadolu Metal is expected to generate 0.54 times more return on investment than Birlik Mensucat. However, Koza Anadolu Metal is 1.85 times less risky than Birlik Mensucat. It trades about -0.28 of its potential returns per unit of risk. Birlik Mensucat Ticaret is currently generating about -0.16 per unit of risk. If you would invest  7,515  in Koza Anadolu Metal on September 23, 2024 and sell it today you would lose (1,005) from holding Koza Anadolu Metal or give up 13.37% of portfolio value over 90 days.

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

Koza Anadolu Metal  vs.  Birlik Mensucat Ticaret

Koza Anadolu Metal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Birlik Mensucat Ticaret

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Koza Anadolu and Birlik Mensucat

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

The idea behind Koza Anadolu Metal and Birlik Mensucat Ticaret 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.