Correlation Between Ihlas Holding and Cuhadaroglu Metal

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

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

Diversification Opportunities for Ihlas Holding and Cuhadaroglu Metal

0.75

Correlation Coefficient

Ihlas Holding  Cuhadaroglu Metal

Poor diversification

The 3 months correlation between Ihlas and Cuhadaroglu is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ihlas Holding 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 Ihlas Holding 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 Ihlas Holding 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 Ihlas Holding i.e., Ihlas Holding and Cuhadaroglu Metal go up and down completely randomly.

Pair Corralation between Ihlas Holding and Cuhadaroglu Metal

Assuming the 90 days trading horizon Ihlas Holding AS is expected to under-perform the Cuhadaroglu Metal. In addition to that, Ihlas Holding is 1.78 times more volatile than Cuhadaroglu Metal Sanayi. It trades about -0.08 of its total potential returns per unit of risk. Cuhadaroglu Metal Sanayi is currently generating about -0.12 per unit of volatility. If you would invest  2,792  in Cuhadaroglu Metal Sanayi on December 30, 2024 and sell it today you would lose (610.00) from holding Cuhadaroglu Metal Sanayi or give up 21.85% of portfolio value over 90 days.

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

Ihlas Holding AS  vs.  Cuhadaroglu Metal Sanayi

Ihlas Holding AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ihlas Holding AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Cuhadaroglu Metal Sanayi

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Ihlas Holding and Cuhadaroglu Metal

The main advantage of trading using opposite Ihlas Holding and Cuhadaroglu Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ihlas Holding 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 Ihlas Holding 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.