Correlation Between Vestel Elektronik and Cemtas Celik

Can any of the company-specific risk be diversified away by investing in both Vestel Elektronik and Cemtas Celik 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 Vestel Elektronik and Cemtas Celik into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vestel Elektronik Sanayi and Cemtas Celik Makina, you can compare the effects of market volatilities on Vestel Elektronik and Cemtas Celik 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 Vestel Elektronik with a short position of Cemtas Celik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestel Elektronik and Cemtas Celik.

Diversification Opportunities for Vestel Elektronik and Cemtas Celik

0.88

Correlation Coefficient

Vestel Elektronik  Cemtas Celik

Very poor diversification

The 3 months correlation between Vestel and Cemtas is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vestel Elektronik Sanayi and Cemtas Celik Makina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemtas Celik Makina and Vestel Elektronik 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 Vestel Elektronik Sanayi are associated (or correlated) with Cemtas Celik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemtas Celik Makina has no effect on the direction of Vestel Elektronik i.e., Vestel Elektronik and Cemtas Celik go up and down completely randomly.

Pair Corralation between Vestel Elektronik and Cemtas Celik

Assuming the 90 days trading horizon Vestel Elektronik is expected to generate 8.4 times less return on investment than Cemtas Celik. But when comparing it to its historical volatility, Vestel Elektronik Sanayi is 5.23 times less risky than Cemtas Celik. It trades about 0.02 of its potential returns per unit of risk. Cemtas Celik Makina is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,095  in Cemtas Celik Makina on October 5, 2024 and sell it today you would lose (160.00) from holding Cemtas Celik Makina or give up 14.61% of portfolio value over 90 days.

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

Vestel Elektronik Sanayi  vs.  Cemtas Celik Makina

Vestel Elektronik Sanayi

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vestel Elektronik Sanayi are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Vestel Elektronik demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cemtas Celik Makina

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cemtas Celik Makina are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Cemtas Celik demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vestel Elektronik and Cemtas Celik

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

The idea behind Vestel Elektronik Sanayi and Cemtas Celik Makina 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.