Correlation Between Alarko Carrier and Nuh Cimento

Can any of the company-specific risk be diversified away by investing in both Alarko Carrier and Nuh Cimento 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 Alarko Carrier and Nuh Cimento into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alarko Carrier Sanayi and Nuh Cimento Sanayi, you can compare the effects of market volatilities on Alarko Carrier and Nuh Cimento 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 Alarko Carrier with a short position of Nuh Cimento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alarko Carrier and Nuh Cimento.

Diversification Opportunities for Alarko Carrier and Nuh Cimento

0.75

Correlation Coefficient

Alarko Carrier  Nuh Cimento

Poor diversification

The 3 months correlation between Alarko and Nuh is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alarko Carrier Sanayi and Nuh Cimento Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuh Cimento Sanayi and Alarko Carrier 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 Alarko Carrier Sanayi are associated (or correlated) with Nuh Cimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuh Cimento Sanayi has no effect on the direction of Alarko Carrier i.e., Alarko Carrier and Nuh Cimento go up and down completely randomly.

Pair Corralation between Alarko Carrier and Nuh Cimento

Assuming the 90 days trading horizon Alarko Carrier Sanayi is expected to generate 1.18 times more return on investment than Nuh Cimento. However, Alarko Carrier is 1.18 times more volatile than Nuh Cimento Sanayi. It trades about -0.05 of its potential returns per unit of risk. Nuh Cimento Sanayi is currently generating about -0.19 per unit of risk. If you would invest  93,950  in Alarko Carrier Sanayi on December 4, 2024 and sell it today you would lose (2,700) from holding Alarko Carrier Sanayi or give up 2.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Alarko Carrier Sanayi  vs.  Nuh Cimento Sanayi

Alarko Carrier Sanayi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alarko Carrier Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Nuh Cimento Sanayi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuh Cimento Sanayi 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 forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Alarko Carrier and Nuh Cimento

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

The idea behind Alarko Carrier Sanayi and Nuh Cimento Sanayi 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.