Correlation Between IZDEMIR Enerji and Afyon Cimento

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

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

Diversification Opportunities for IZDEMIR Enerji and Afyon Cimento

0.54

Correlation Coefficient

IZDEMIR Enerji  Afyon Cimento

Very weak diversification

The 3 months correlation between IZDEMIR and Afyon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding IZDEMIR Enerji Elektrik 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 IZDEMIR Enerji 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 IZDEMIR Enerji Elektrik 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 IZDEMIR Enerji i.e., IZDEMIR Enerji and Afyon Cimento go up and down completely randomly.

Pair Corralation between IZDEMIR Enerji and Afyon Cimento

Assuming the 90 days trading horizon IZDEMIR Enerji Elektrik is expected to generate 0.78 times more return on investment than Afyon Cimento. However, IZDEMIR Enerji Elektrik is 1.28 times less risky than Afyon Cimento. It trades about -0.04 of its potential returns per unit of risk. Afyon Cimento Sanayi is currently generating about -0.07 per unit of risk. If you would invest  506.00  in IZDEMIR Enerji Elektrik on October 10, 2024 and sell it today you would lose (7.00) from holding IZDEMIR Enerji Elektrik or give up 1.38% of portfolio value over 90 days.

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

IZDEMIR Enerji Elektrik  vs.  Afyon Cimento Sanayi

IZDEMIR Enerji Elektrik

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IZDEMIR Enerji Elektrik are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, IZDEMIR Enerji demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Afyon Cimento Sanayi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Afyon Cimento Sanayi are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Afyon Cimento may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IZDEMIR Enerji and Afyon Cimento

The main advantage of trading using opposite IZDEMIR Enerji and Afyon Cimento positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IZDEMIR Enerji 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 IZDEMIR Enerji Elektrik 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.