Correlation Between EIS Eczacibasi and Arcelik AS

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

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

Diversification Opportunities for EIS Eczacibasi and Arcelik AS

0.61

Correlation Coefficient

EIS Eczacibasi  Arcelik AS

Poor diversification

The 3 months correlation between EIS and Arcelik is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding EIS Eczacibasi Ilac and Arcelik AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcelik AS and EIS Eczacibasi 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 EIS Eczacibasi Ilac are associated (or correlated) with Arcelik AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcelik AS has no effect on the direction of EIS Eczacibasi i.e., EIS Eczacibasi and Arcelik AS go up and down completely randomly.

Pair Corralation between EIS Eczacibasi and Arcelik AS

Assuming the 90 days trading horizon EIS Eczacibasi Ilac is expected to generate 1.06 times more return on investment than Arcelik AS. However, EIS Eczacibasi is 1.06 times more volatile than Arcelik AS. It trades about -0.13 of its potential returns per unit of risk. Arcelik AS is currently generating about -0.25 per unit of risk. If you would invest  4,758  in EIS Eczacibasi Ilac on October 13, 2024 and sell it today you would lose (208.00) from holding EIS Eczacibasi Ilac or give up 4.37% of portfolio value over 90 days.

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

EIS Eczacibasi Ilac  vs.  Arcelik AS

EIS Eczacibasi Ilac

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EIS Eczacibasi Ilac are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, EIS Eczacibasi demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Arcelik AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arcelik AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with EIS Eczacibasi and Arcelik AS

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

The idea behind EIS Eczacibasi Ilac and Arcelik AS 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.