Correlation Between Arcelik AS and Cuhadaroglu Metal

Can any of the company-specific risk be diversified away by investing in both Arcelik AS and Cuhadaroglu Metal 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 Arcelik AS and Cuhadaroglu Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Arcelik AS and Cuhadaroglu Metal

0.48

Correlation Coefficient

Arcelik AS  Cuhadaroglu Metal

Very weak diversification

The 3 months correlation between Arcelik and Cuhadaroglu is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Arcelik AS and Cuhadaroglu Metal Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuhadaroglu Metal Sanayi and Arcelik AS 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 Arcelik AS are associated (or correlated) with Cuhadaroglu Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuhadaroglu Metal Sanayi has no effect on the direction of Arcelik AS i.e., Arcelik AS and Cuhadaroglu Metal go up and down completely randomly.

Pair Corralation between Arcelik AS and Cuhadaroglu Metal

Assuming the 90 days trading horizon Arcelik AS is expected to generate 1.02 times less return on investment than Cuhadaroglu Metal. In addition to that, Arcelik AS is 1.01 times more volatile than Cuhadaroglu Metal Sanayi. It trades about 0.01 of its total potential returns per unit of risk. Cuhadaroglu Metal Sanayi is currently generating about 0.01 per unit of volatility. If you would invest  2,100  in Cuhadaroglu Metal Sanayi on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Cuhadaroglu Metal Sanayi or generate 0.0% return on investment over 90 days.

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

Arcelik AS  vs.  Cuhadaroglu Metal Sanayi

Arcelik AS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cuhadaroglu Metal Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Arcelik AS and Cuhadaroglu Metal

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

The idea behind Arcelik AS and Cuhadaroglu Metal 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.