Correlation Between Kardemir Karabuk and Koza Anadolu

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

Diversification Opportunities for Kardemir Karabuk and Koza Anadolu

0.56

Correlation Coefficient

Kardemir Karabuk  Koza Anadolu

Very weak diversification

The 3 months correlation between Kardemir and Koza is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kardemir Karabuk Demir and Koza Anadolu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koza Anadolu Metal 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 Koza Anadolu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koza Anadolu Metal has no effect on the direction of Kardemir Karabuk i.e., Kardemir Karabuk and Koza Anadolu go up and down completely randomly.

Pair Corralation between Kardemir Karabuk and Koza Anadolu

Assuming the 90 days trading horizon Kardemir Karabuk is expected to generate 1.69 times less return on investment than Koza Anadolu. In addition to that, Kardemir Karabuk is 1.07 times more volatile than Koza Anadolu Metal. It trades about 0.06 of its total potential returns per unit of risk. Koza Anadolu Metal is currently generating about 0.1 per unit of volatility. If you would invest  7,425  in Koza Anadolu Metal on December 31, 2024 and sell it today you would earn a total of  1,250  from holding Koza Anadolu Metal or generate 16.84% 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.  Koza Anadolu Metal

Kardemir Karabuk Demir

Risk-Adjusted Performance

Insignificant

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

Koza Anadolu Metal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Koza Anadolu Metal are ranked lower than 8 (%) 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.

Pair Trading with Kardemir Karabuk and Koza Anadolu

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

The idea behind Kardemir Karabuk Demir and Koza Anadolu Metal 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.