Correlation Between Eregli Demir and Vakif Menkul

Can any of the company-specific risk be diversified away by investing in both Eregli Demir and Vakif Menkul 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 Eregli Demir and Vakif Menkul into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eregli Demir ve and Vakif Menkul Kiymet, you can compare the effects of market volatilities on Eregli Demir and Vakif Menkul 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 Eregli Demir with a short position of Vakif Menkul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eregli Demir and Vakif Menkul.

Diversification Opportunities for Eregli Demir and Vakif Menkul

0.79

Correlation Coefficient

Eregli Demir  Vakif Menkul

Poor diversification

The 3 months correlation between Eregli and Vakif is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Eregli Demir ve and Vakif Menkul Kiymet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vakif Menkul Kiymet and Eregli Demir 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 Eregli Demir ve are associated (or correlated) with Vakif Menkul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vakif Menkul Kiymet has no effect on the direction of Eregli Demir i.e., Eregli Demir and Vakif Menkul go up and down completely randomly.

Pair Corralation between Eregli Demir and Vakif Menkul

Assuming the 90 days trading horizon Eregli Demir is expected to generate 1.04 times less return on investment than Vakif Menkul. But when comparing it to its historical volatility, Eregli Demir ve is 1.91 times less risky than Vakif Menkul. It trades about 0.08 of its potential returns per unit of risk. Vakif Menkul Kiymet is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,057  in Vakif Menkul Kiymet on March 17, 2024 and sell it today you would earn a total of  499.00  from holding Vakif Menkul Kiymet or generate 24.26% return on investment over 90 days.

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

Eregli Demir ve  vs.  Vakif Menkul Kiymet

Eregli Demir ve

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eregli Demir ve are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain essential indicators, Eregli Demir demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Vakif Menkul Kiymet

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vakif Menkul Kiymet are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Vakif Menkul demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eregli Demir and Vakif Menkul

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

The idea behind Eregli Demir ve and Vakif Menkul Kiymet 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.