Correlation Between Cuhadaroglu Metal and Lokman Hekim

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

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

Diversification Opportunities for Cuhadaroglu Metal and Lokman Hekim

0.62

Correlation Coefficient

Cuhadaroglu Metal  Lokman Hekim

Poor diversification

The 3 months correlation between Cuhadaroglu and Lokman is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cuhadaroglu Metal Sanayi and Lokman Hekim Engurusag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lokman Hekim Engurusag and Cuhadaroglu Metal 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 Cuhadaroglu Metal Sanayi are associated (or correlated) with Lokman Hekim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lokman Hekim Engurusag has no effect on the direction of Cuhadaroglu Metal i.e., Cuhadaroglu Metal and Lokman Hekim go up and down completely randomly.

Pair Corralation between Cuhadaroglu Metal and Lokman Hekim

Assuming the 90 days trading horizon Cuhadaroglu Metal is expected to generate 4.09 times less return on investment than Lokman Hekim. In addition to that, Cuhadaroglu Metal is 1.08 times more volatile than Lokman Hekim Engurusag. It trades about 0.03 of its total potential returns per unit of risk. Lokman Hekim Engurusag is currently generating about 0.13 per unit of volatility. If you would invest  631.00  in Lokman Hekim Engurusag on October 15, 2024 and sell it today you would earn a total of  1,439  from holding Lokman Hekim Engurusag or generate 228.05% return on investment over 90 days.

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

Cuhadaroglu Metal Sanayi  vs.  Lokman Hekim Engurusag

Cuhadaroglu Metal Sanayi

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cuhadaroglu Metal Sanayi are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Cuhadaroglu Metal demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lokman Hekim Engurusag

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lokman Hekim Engurusag are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Lokman Hekim demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cuhadaroglu Metal and Lokman Hekim

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

The idea behind Cuhadaroglu Metal Sanayi and Lokman Hekim Engurusag 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.