Correlation Between Kardemir Karabuk and Cemtas Celik

Can any of the company-specific risk be diversified away by investing in both Kardemir Karabuk and Cemtas Celik 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 Kardemir Karabuk and Cemtas Celik into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kardemir Karabuk Demir and Cemtas Celik Makina, you can compare the effects of market volatilities on Kardemir Karabuk and Cemtas Celik 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 Kardemir Karabuk with a short position of Cemtas Celik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kardemir Karabuk and Cemtas Celik.

Diversification Opportunities for Kardemir Karabuk and Cemtas Celik

0.5

Correlation Coefficient

Kardemir Karabuk  Cemtas Celik

Very weak diversification

The 3 months correlation between Kardemir and Cemtas is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kardemir Karabuk Demir and Cemtas Celik Makina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemtas Celik Makina and Kardemir Karabuk 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 Kardemir Karabuk Demir are associated (or correlated) with Cemtas Celik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemtas Celik Makina has no effect on the direction of Kardemir Karabuk i.e., Kardemir Karabuk and Cemtas Celik go up and down completely randomly.

Pair Corralation between Kardemir Karabuk and Cemtas Celik

Assuming the 90 days trading horizon Kardemir Karabuk Demir is expected to generate 1.75 times more return on investment than Cemtas Celik. However, Kardemir Karabuk is 1.75 times more volatile than Cemtas Celik Makina. It trades about 0.26 of its potential returns per unit of risk. Cemtas Celik Makina is currently generating about -0.06 per unit of risk. If you would invest  1,803  in Kardemir Karabuk Demir on September 23, 2024 and sell it today you would earn a total of  1,037  from holding Kardemir Karabuk Demir or generate 57.52% return on investment over 90 days.

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

Kardemir Karabuk Demir  vs.  Cemtas Celik Makina

Kardemir Karabuk Demir

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kardemir Karabuk demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cemtas Celik Makina

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kardemir Karabuk and Cemtas Celik

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

The idea behind Kardemir Karabuk Demir and Cemtas Celik Makina 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..