Correlation Between Qnb Finansbank and Mercan Kimya

Can any of the company-specific risk be diversified away by investing in both Qnb Finansbank and Mercan Kimya 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 Qnb Finansbank and Mercan Kimya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qnb Finansbank AS and Mercan Kimya Sanayi, you can compare the effects of market volatilities on Qnb Finansbank and Mercan Kimya 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 Qnb Finansbank with a short position of Mercan Kimya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qnb Finansbank and Mercan Kimya.

Diversification Opportunities for Qnb Finansbank and Mercan Kimya

0.5

Correlation Coefficient

Qnb Finansbank  Mercan Kimya

Very weak diversification

The 3 months correlation between Qnb and Mercan is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Qnb Finansbank AS and Mercan Kimya Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercan Kimya Sanayi and Qnb Finansbank 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 Qnb Finansbank AS are associated (or correlated) with Mercan Kimya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercan Kimya Sanayi has no effect on the direction of Qnb Finansbank i.e., Qnb Finansbank and Mercan Kimya go up and down completely randomly.

Pair Corralation between Qnb Finansbank and Mercan Kimya

Assuming the 90 days trading horizon Qnb Finansbank AS is expected to under-perform the Mercan Kimya. But the stock apears to be less risky and, when comparing its historical volatility, Qnb Finansbank AS is 1.32 times less risky than Mercan Kimya. The stock trades about -0.07 of its potential returns per unit of risk. The Mercan Kimya Sanayi is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,330  in Mercan Kimya Sanayi on October 8, 2024 and sell it today you would earn a total of  1.00  from holding Mercan Kimya Sanayi or generate 0.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Qnb Finansbank AS  vs.  Mercan Kimya Sanayi

Qnb Finansbank AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qnb Finansbank AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Mercan Kimya Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Qnb Finansbank and Mercan Kimya

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

The idea behind Qnb Finansbank AS and Mercan Kimya Sanayi 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.