Correlation Between KOC METALURJI and Cuhadaroglu Metal

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

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

Diversification Opportunities for KOC METALURJI and Cuhadaroglu Metal

0.46

Correlation Coefficient

KOC METALURJI  Cuhadaroglu Metal

Very weak diversification

The 3 months correlation between KOC and Cuhadaroglu is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding KOC METALURJI 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 KOC METALURJI 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 KOC METALURJI 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 KOC METALURJI i.e., KOC METALURJI and Cuhadaroglu Metal go up and down completely randomly.

Pair Corralation between KOC METALURJI and Cuhadaroglu Metal

Assuming the 90 days trading horizon KOC METALURJI is expected to generate 2.49 times less return on investment than Cuhadaroglu Metal. But when comparing it to its historical volatility, KOC METALURJI is 1.06 times less risky than Cuhadaroglu Metal. It trades about 0.15 of its potential returns per unit of risk. Cuhadaroglu Metal Sanayi is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  1,943  in Cuhadaroglu Metal Sanayi on October 7, 2024 and sell it today you would earn a total of  875.00  from holding Cuhadaroglu Metal Sanayi or generate 45.03% return on investment over 90 days.

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

KOC METALURJI  vs.  Cuhadaroglu Metal Sanayi

KOC METALURJI

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KOC METALURJI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, KOC METALURJI 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 KOC METALURJI and Cuhadaroglu Metal

The main advantage of trading using opposite KOC METALURJI and Cuhadaroglu Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KOC METALURJI 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 KOC METALURJI 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.