Correlation Between Kardemir Karabuk and Koc Holding

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

Diversification Opportunities for Kardemir Karabuk and Koc Holding

0.64

Correlation Coefficient

Kardemir Karabuk  Koc Holding

Poor diversification

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

Pair Corralation between Kardemir Karabuk and Koc Holding

Assuming the 90 days trading horizon Kardemir Karabuk is expected to generate 1.94 times less return on investment than Koc Holding. In addition to that, Kardemir Karabuk is 1.2 times more volatile than Koc Holding AS. It trades about 0.02 of its total potential returns per unit of risk. Koc Holding AS is currently generating about 0.06 per unit of volatility. If you would invest  17,240  in Koc Holding AS on October 12, 2024 and sell it today you would earn a total of  1,010  from holding Koc Holding AS or generate 5.86% return on investment over 90 days.

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

Kardemir Karabuk Demir  vs.  Koc Holding AS

Kardemir Karabuk Demir

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Kardemir Karabuk is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Koc Holding AS

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Koc Holding AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Koc Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kardemir Karabuk and Koc Holding

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

The idea behind Kardemir Karabuk Demir and Koc Holding AS 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.