Correlation Between Morgan Stanley and Kardemir Karabuk

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Kardemir Karabuk 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 Morgan Stanley and Kardemir Karabuk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Morgan Stanley Direct and Kardemir Karabuk Demir, you can compare the effects of market volatilities on Morgan Stanley and Kardemir Karabuk 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 Morgan Stanley with a short position of Kardemir Karabuk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Kardemir Karabuk.

Diversification Opportunities for Morgan Stanley and Kardemir Karabuk

-0.42

Correlation Coefficient

Morgan Stanley  Kardemir Karabuk

Very good diversification

The 3 months correlation between Morgan and Kardemir is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Kardemir Karabuk Demir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kardemir Karabuk Demir and Morgan Stanley 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 Morgan Stanley Direct are associated (or correlated) with Kardemir Karabuk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kardemir Karabuk Demir has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Kardemir Karabuk go up and down completely randomly.

Pair Corralation between Morgan Stanley and Kardemir Karabuk

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Kardemir Karabuk. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley Direct is 2.95 times less risky than Kardemir Karabuk. The stock trades about -0.01 of its potential returns per unit of risk. The Kardemir Karabuk Demir is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,504  in Kardemir Karabuk Demir on December 28, 2024 and sell it today you would lose (72.00) from holding Kardemir Karabuk Demir or give up 2.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Morgan Stanley Direct  vs.  Kardemir Karabuk Demir

Morgan Stanley Direct

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley Direct has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Kardemir Karabuk Demir

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kardemir Karabuk Demir has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Morgan Stanley and Kardemir Karabuk

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

The idea behind Morgan Stanley Direct and Kardemir Karabuk Demir 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.