Correlation Between Kocaer Celik and Dogu Aras

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

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

Diversification Opportunities for Kocaer Celik and Dogu Aras

-0.49

Correlation Coefficient

Kocaer Celik  Dogu Aras

Very good diversification

The 3 months correlation between Kocaer and Dogu is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kocaer Celik Sanayi and Dogu Aras Enerji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dogu Aras Enerji and Kocaer Celik 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 Kocaer Celik Sanayi are associated (or correlated) with Dogu Aras. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dogu Aras Enerji has no effect on the direction of Kocaer Celik i.e., Kocaer Celik and Dogu Aras go up and down completely randomly.

Pair Corralation between Kocaer Celik and Dogu Aras

Assuming the 90 days trading horizon Kocaer Celik Sanayi is expected to generate 0.62 times more return on investment than Dogu Aras. However, Kocaer Celik Sanayi is 1.6 times less risky than Dogu Aras. It trades about 0.38 of its potential returns per unit of risk. Dogu Aras Enerji is currently generating about -0.07 per unit of risk. If you would invest  1,230  in Kocaer Celik Sanayi on September 5, 2024 and sell it today you would earn a total of  210.00  from holding Kocaer Celik Sanayi or generate 17.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Kocaer Celik Sanayi  vs.  Dogu Aras Enerji

Kocaer Celik Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dogu Aras Enerji

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dogu Aras Enerji are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Dogu Aras is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kocaer Celik and Dogu Aras

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

The idea behind Kocaer Celik Sanayi and Dogu Aras Enerji 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.