Correlation Between IZDEMIR Enerji and Cuhadaroglu Metal

Can any of the company-specific risk be diversified away by investing in both IZDEMIR Enerji 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 IZDEMIR Enerji and Cuhadaroglu Metal 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 Cuhadaroglu Metal Sanayi, you can compare the effects of market volatilities on IZDEMIR Enerji 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 IZDEMIR Enerji with a short position of Cuhadaroglu Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of IZDEMIR Enerji and Cuhadaroglu Metal.

Diversification Opportunities for IZDEMIR Enerji and Cuhadaroglu Metal

0.29

Correlation Coefficient

IZDEMIR Enerji  Cuhadaroglu Metal

Modest diversification

The 3 months correlation between IZDEMIR and Cuhadaroglu is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding IZDEMIR Enerji Elektrik 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 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 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 IZDEMIR Enerji i.e., IZDEMIR Enerji and Cuhadaroglu Metal go up and down completely randomly.

Pair Corralation between IZDEMIR Enerji and Cuhadaroglu Metal

Assuming the 90 days trading horizon IZDEMIR Enerji is expected to generate 2.07 times less return on investment than Cuhadaroglu Metal. In addition to that, IZDEMIR Enerji is 1.08 times more volatile than Cuhadaroglu Metal Sanayi. It trades about 0.02 of its total potential returns per unit of risk. Cuhadaroglu Metal Sanayi is currently generating about 0.04 per unit of volatility. If you would invest  1,869  in Cuhadaroglu Metal Sanayi on October 5, 2024 and sell it today you would earn a total of  971.00  from holding Cuhadaroglu Metal Sanayi or generate 51.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	70.45%
Values	Daily Returns

IZDEMIR Enerji Elektrik  vs.  Cuhadaroglu Metal Sanayi

IZDEMIR Enerji Elektrik

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IZDEMIR Enerji Elektrik are ranked lower than 9 (%) 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.

Cuhadaroglu Metal Sanayi

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cuhadaroglu Metal Sanayi are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Cuhadaroglu Metal demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IZDEMIR Enerji and Cuhadaroglu Metal

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

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.