Correlation Between Eregli Demir and Alarko Carrier

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

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

Diversification Opportunities for Eregli Demir and Alarko Carrier

0.66

Correlation Coefficient

Eregli Demir  Alarko Carrier

Poor diversification

The 3 months correlation between Eregli and Alarko is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Eregli Demir ve and Alarko Carrier Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alarko Carrier Sanayi and Eregli Demir 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 Eregli Demir ve are associated (or correlated) with Alarko Carrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alarko Carrier Sanayi has no effect on the direction of Eregli Demir i.e., Eregli Demir and Alarko Carrier go up and down completely randomly.

Pair Corralation between Eregli Demir and Alarko Carrier

Assuming the 90 days trading horizon Eregli Demir ve is expected to generate 1.04 times more return on investment than Alarko Carrier. However, Eregli Demir is 1.04 times more volatile than Alarko Carrier Sanayi. It trades about 0.03 of its potential returns per unit of risk. Alarko Carrier Sanayi is currently generating about 0.03 per unit of risk. If you would invest  2,490  in Eregli Demir ve on September 22, 2024 and sell it today you would earn a total of  20.00  from holding Eregli Demir ve or generate 0.8% return on investment over 90 days.

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

Eregli Demir ve  vs.  Alarko Carrier Sanayi

Eregli Demir ve

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eregli Demir ve are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Eregli Demir is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Alarko Carrier Sanayi

Risk-Adjusted Performance

0 of 100

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 fairly strong forward indicators, Alarko Carrier is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Eregli Demir and Alarko Carrier

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

The idea behind Eregli Demir ve and Alarko Carrier 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.