Correlation Between Kardemir Karabuk and Sekerbank TAS

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

Diversification Opportunities for Kardemir Karabuk and Sekerbank TAS

0.62

Correlation Coefficient

Kardemir Karabuk  Sekerbank TAS

Poor diversification

The 3 months correlation between Kardemir and Sekerbank is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kardemir Karabuk Demir and Sekerbank TAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekerbank 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 Sekerbank TAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekerbank TAS has no effect on the direction of Kardemir Karabuk i.e., Kardemir Karabuk and Sekerbank TAS go up and down completely randomly.

Pair Corralation between Kardemir Karabuk and Sekerbank TAS

Assuming the 90 days trading horizon Kardemir Karabuk is expected to generate 2.47 times less return on investment than Sekerbank TAS. But when comparing it to its historical volatility, Kardemir Karabuk Demir is 1.15 times less risky than Sekerbank TAS. It trades about 0.04 of its potential returns per unit of risk. Sekerbank TAS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  407.00  in Sekerbank TAS on October 21, 2024 and sell it today you would earn a total of  50.00  from holding Sekerbank TAS or generate 12.29% 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.  Sekerbank TAS

Kardemir Karabuk Demir

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 3 (%) 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.

Sekerbank TAS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sekerbank TAS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Sekerbank TAS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kardemir Karabuk and Sekerbank TAS

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

The idea behind Kardemir Karabuk Demir and Sekerbank 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.