Correlation Between Kardemir Karabuk and Turkiye Sinai

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

Diversification Opportunities for Kardemir Karabuk and Turkiye Sinai

0.57

Correlation Coefficient

Kardemir Karabuk  Turkiye Sinai

Very weak diversification

The 3 months correlation between Kardemir and Turkiye is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kardemir Karabuk Demir and Turkiye Sinai Kalkinma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkiye Sinai Kalkinma 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 Turkiye Sinai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turkiye Sinai Kalkinma has no effect on the direction of Kardemir Karabuk i.e., Kardemir Karabuk and Turkiye Sinai go up and down completely randomly.

Pair Corralation between Kardemir Karabuk and Turkiye Sinai

Assuming the 90 days trading horizon Kardemir Karabuk Demir is expected to generate 1.66 times more return on investment than Turkiye Sinai. However, Kardemir Karabuk is 1.66 times more volatile than Turkiye Sinai Kalkinma. It trades about 0.12 of its potential returns per unit of risk. Turkiye Sinai Kalkinma is currently generating about -0.07 per unit of risk. If you would invest  2,632  in Kardemir Karabuk Demir on September 22, 2024 and sell it today you would earn a total of  164.00  from holding Kardemir Karabuk Demir or generate 6.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Kardemir Karabuk Demir  vs.  Turkiye Sinai Kalkinma

Kardemir Karabuk Demir

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 6 (%) 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.

Turkiye Sinai Kalkinma

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Turkiye Sinai Kalkinma are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Turkiye Sinai is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kardemir Karabuk and Turkiye Sinai

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

The idea behind Kardemir Karabuk Demir and Turkiye Sinai Kalkinma 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.