Correlation Between Ulker Biskuvi and New Concept

Can any of the company-specific risk be diversified away by investing in both Ulker Biskuvi and New Concept 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 Ulker Biskuvi and New Concept into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ulker Biskuvi Sanayi and New Concept Energy, you can compare the effects of market volatilities on Ulker Biskuvi and New Concept 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 Ulker Biskuvi with a short position of New Concept. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulker Biskuvi and New Concept.

Diversification Opportunities for Ulker Biskuvi and New Concept

0.56

Correlation Coefficient

Ulker Biskuvi  New Concept

Very weak diversification

The 3 months correlation between Ulker and New is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ulker Biskuvi Sanayi and New Concept Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Concept Energy and Ulker Biskuvi 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 Ulker Biskuvi Sanayi are associated (or correlated) with New Concept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Concept Energy has no effect on the direction of Ulker Biskuvi i.e., Ulker Biskuvi and New Concept go up and down completely randomly.

Pair Corralation between Ulker Biskuvi and New Concept

Assuming the 90 days trading horizon Ulker Biskuvi is expected to generate 1.36 times less return on investment than New Concept. But when comparing it to its historical volatility, Ulker Biskuvi Sanayi is 1.72 times less risky than New Concept. It trades about 0.14 of its potential returns per unit of risk. New Concept Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  98.00  in New Concept Energy on February 24, 2024 and sell it today you would earn a total of  34.00  from holding New Concept Energy or generate 34.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Ulker Biskuvi Sanayi  vs.  New Concept Energy

Ulker Biskuvi Sanayi

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ulker Biskuvi Sanayi are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Ulker Biskuvi demonstrated solid returns over the last few months and may actually be approaching a breakup point.

New Concept Energy

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New Concept Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, New Concept reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ulker Biskuvi and New Concept

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

The idea behind Ulker Biskuvi Sanayi and New Concept Energy 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..