Correlation Between Ege Endustri and Afyon Cimento

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

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

Diversification Opportunities for Ege Endustri and Afyon Cimento

0.72

Correlation Coefficient

Ege Endustri  Afyon Cimento

Poor diversification

The 3 months correlation between Ege and Afyon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ege Endustri ve and Afyon Cimento Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afyon Cimento Sanayi and Ege Endustri 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 Ege Endustri ve are associated (or correlated) with Afyon Cimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afyon Cimento Sanayi has no effect on the direction of Ege Endustri i.e., Ege Endustri and Afyon Cimento go up and down completely randomly.

Pair Corralation between Ege Endustri and Afyon Cimento

Assuming the 90 days trading horizon Ege Endustri is expected to generate 1.02 times less return on investment than Afyon Cimento. In addition to that, Ege Endustri is 1.03 times more volatile than Afyon Cimento Sanayi. It trades about 0.05 of its total potential returns per unit of risk. Afyon Cimento Sanayi is currently generating about 0.05 per unit of volatility. If you would invest  839.00  in Afyon Cimento Sanayi on September 14, 2024 and sell it today you would earn a total of  656.00  from holding Afyon Cimento Sanayi or generate 78.19% return on investment over 90 days.

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

Ege Endustri ve  vs.  Afyon Cimento Sanayi

Ege Endustri ve

Risk-Adjusted Performance

0 of 100

Very Weak

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

Afyon Cimento Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ege Endustri and Afyon Cimento

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

The idea behind Ege Endustri ve and Afyon 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.