Correlation Between Kardemir Karabuk and Hektas Ticaret

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

Diversification Opportunities for Kardemir Karabuk and Hektas Ticaret

0.42

Correlation Coefficient

Kardemir Karabuk  Hektas Ticaret

Very weak diversification

The 3 months correlation between Kardemir and Hektas is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kardemir Karabuk Demir and Hektas Ticaret TAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hektas Ticaret TAS 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 Hektas Ticaret. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hektas Ticaret TAS has no effect on the direction of Kardemir Karabuk i.e., Kardemir Karabuk and Hektas Ticaret go up and down completely randomly.

Pair Corralation between Kardemir Karabuk and Hektas Ticaret

Assuming the 90 days trading horizon Kardemir Karabuk Demir is expected to generate 0.89 times more return on investment than Hektas Ticaret. However, Kardemir Karabuk Demir is 1.12 times less risky than Hektas Ticaret. It trades about 0.07 of its potential returns per unit of risk. Hektas Ticaret TAS is currently generating about -0.08 per unit of risk. If you would invest  2,622  in Kardemir Karabuk Demir on September 26, 2024 and sell it today you would earn a total of  224.00  from holding Kardemir Karabuk Demir or generate 8.54% 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.  Hektas Ticaret TAS

Kardemir Karabuk Demir

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 5 (%) 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 January 2025.

Hektas Ticaret TAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hektas Ticaret TAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Kardemir Karabuk and Hektas Ticaret

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

The idea behind Kardemir Karabuk Demir and Hektas Ticaret TAS 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.