Correlation Between Kardemir Karabuk and Haci Omer

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

Diversification Opportunities for Kardemir Karabuk and Haci Omer

0.55

Correlation Coefficient

Kardemir Karabuk  Haci Omer

Very weak diversification

The 3 months correlation between Kardemir and Haci is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kardemir Karabuk Demir and Haci Omer Sabanci in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haci Omer Sabanci 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 Haci Omer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haci Omer Sabanci has no effect on the direction of Kardemir Karabuk i.e., Kardemir Karabuk and Haci Omer go up and down completely randomly.

Pair Corralation between Kardemir Karabuk and Haci Omer

Assuming the 90 days trading horizon Kardemir Karabuk is expected to generate 1.46 times less return on investment than Haci Omer. In addition to that, Kardemir Karabuk is 1.27 times more volatile than Haci Omer Sabanci. It trades about 0.04 of its total potential returns per unit of risk. Haci Omer Sabanci is currently generating about 0.08 per unit of volatility. If you would invest  4,183  in Haci Omer Sabanci on September 24, 2024 and sell it today you would earn a total of  5,217  from holding Haci Omer Sabanci or generate 124.72% 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.  Haci Omer Sabanci

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.

Haci Omer Sabanci

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kardemir Karabuk and Haci Omer

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

The idea behind Kardemir Karabuk Demir and Haci Omer Sabanci 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.