Correlation Between Koza Anadolu and Kardemir Karabuk

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

Diversification Opportunities for Koza Anadolu and Kardemir Karabuk

0.65

Correlation Coefficient

Koza Anadolu  Kardemir Karabuk

Poor diversification

The 3 months correlation between Koza and Kardemir is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Koza Anadolu Metal and Kardemir Karabuk Demir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kardemir Karabuk Demir 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 Kardemir Karabuk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kardemir Karabuk Demir has no effect on the direction of Koza Anadolu i.e., Koza Anadolu and Kardemir Karabuk go up and down completely randomly.

Pair Corralation between Koza Anadolu and Kardemir Karabuk

Assuming the 90 days trading horizon Koza Anadolu Metal is expected to generate 1.08 times more return on investment than Kardemir Karabuk. However, Koza Anadolu is 1.08 times more volatile than Kardemir Karabuk Demir. It trades about 0.04 of its potential returns per unit of risk. Kardemir Karabuk Demir is currently generating about 0.04 per unit of risk. If you would invest  4,730  in Koza Anadolu Metal on October 4, 2024 and sell it today you would earn a total of  2,380  from holding Koza Anadolu Metal or generate 50.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Koza Anadolu Metal  vs.  Kardemir Karabuk Demir

Koza Anadolu Metal

Risk-Adjusted Performance

9 of 100

OK

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

Kardemir Karabuk Demir

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kardemir Karabuk may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Koza Anadolu and Kardemir Karabuk

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

The idea behind Koza Anadolu Metal and Kardemir Karabuk Demir 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.