Correlation Between ICBC Turkey and QNB Finans

Can any of the company-specific risk be diversified away by investing in both ICBC Turkey and QNB Finans 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 ICBC Turkey and QNB Finans into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ICBC Turkey Bank and QNB Finans Finansal, you can compare the effects of market volatilities on ICBC Turkey and QNB Finans 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 ICBC Turkey with a short position of QNB Finans. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICBC Turkey and QNB Finans.

Diversification Opportunities for ICBC Turkey and QNB Finans

-0.51

Correlation Coefficient

ICBC Turkey  QNB Finans

Excellent diversification

The 3 months correlation between ICBC and QNB is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ICBC Turkey Bank and QNB Finans Finansal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QNB Finans Finansal and ICBC Turkey 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 ICBC Turkey Bank are associated (or correlated) with QNB Finans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QNB Finans Finansal has no effect on the direction of ICBC Turkey i.e., ICBC Turkey and QNB Finans go up and down completely randomly.

Pair Corralation between ICBC Turkey and QNB Finans

Assuming the 90 days trading horizon ICBC Turkey Bank is expected to generate 0.59 times more return on investment than QNB Finans. However, ICBC Turkey Bank is 1.69 times less risky than QNB Finans. It trades about 0.02 of its potential returns per unit of risk. QNB Finans Finansal is currently generating about -0.12 per unit of risk. If you would invest  1,500  in ICBC Turkey Bank on March 5, 2024 and sell it today you would earn a total of  7.00  from holding ICBC Turkey Bank or generate 0.47% return on investment over 90 days.

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

ICBC Turkey Bank  vs.  QNB Finans Finansal

ICBC Turkey Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

QNB Finans Finansal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QNB Finans Finansal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with ICBC Turkey and QNB Finans

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

The idea behind ICBC Turkey Bank and QNB Finans Finansal 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.