Correlation Between Koza Anadolu and Smart Gunes

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

Diversification Opportunities for Koza Anadolu and Smart Gunes

0.76

Correlation Coefficient

Koza Anadolu  Smart Gunes

Poor diversification

The 3 months correlation between Koza and Smart is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Koza Anadolu Metal and Smart Gunes Enerjisi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Gunes Enerjisi 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 Smart Gunes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Gunes Enerjisi has no effect on the direction of Koza Anadolu i.e., Koza Anadolu and Smart Gunes go up and down completely randomly.

Pair Corralation between Koza Anadolu and Smart Gunes

Assuming the 90 days trading horizon Koza Anadolu Metal is expected to under-perform the Smart Gunes. In addition to that, Koza Anadolu is 1.15 times more volatile than Smart Gunes Enerjisi. It trades about -0.27 of its total potential returns per unit of risk. Smart Gunes Enerjisi is currently generating about 0.11 per unit of volatility. If you would invest  3,820  in Smart Gunes Enerjisi on September 22, 2024 and sell it today you would earn a total of  180.00  from holding Smart Gunes Enerjisi or generate 4.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Koza Anadolu Metal  vs.  Smart Gunes Enerjisi

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 newest stock price confusion, may contribute to short-horizon losses for the traders.

Smart Gunes Enerjisi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart Gunes Enerjisi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Smart Gunes 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 Smart Gunes

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

The idea behind Koza Anadolu Metal and Smart Gunes Enerjisi 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.