Correlation Between Vestel Elektronik and Kuyas Yatirim

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

Diversification Opportunities for Vestel Elektronik and Kuyas Yatirim

0.53

Correlation Coefficient

Vestel Elektronik  Kuyas Yatirim

Very weak diversification

The 3 months correlation between Vestel and Kuyas is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vestel Elektronik Sanayi and Kuyas Yatirim AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuyas Yatirim AS 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 Kuyas Yatirim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuyas Yatirim AS has no effect on the direction of Vestel Elektronik i.e., Vestel Elektronik and Kuyas Yatirim go up and down completely randomly.

Pair Corralation between Vestel Elektronik and Kuyas Yatirim

Assuming the 90 days trading horizon Vestel Elektronik Sanayi is expected to generate 0.95 times more return on investment than Kuyas Yatirim. However, Vestel Elektronik Sanayi is 1.05 times less risky than Kuyas Yatirim. It trades about 0.05 of its potential returns per unit of risk. Kuyas Yatirim AS is currently generating about 0.01 per unit of risk. If you would invest  5,155  in Vestel Elektronik Sanayi on October 5, 2024 and sell it today you would earn a total of  2,040  from holding Vestel Elektronik Sanayi or generate 39.57% return on investment over 90 days.

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

Vestel Elektronik Sanayi  vs.  Kuyas Yatirim AS

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.

Kuyas Yatirim AS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kuyas Yatirim AS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Kuyas Yatirim demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vestel Elektronik and Kuyas Yatirim

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

The idea behind Vestel Elektronik Sanayi and Kuyas Yatirim AS 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.