Correlation Between Kardemir Karabuk and Cuhadaroglu Metal

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

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

Diversification Opportunities for Kardemir Karabuk and Cuhadaroglu Metal

0.6

Correlation Coefficient

Kardemir Karabuk  Cuhadaroglu Metal

Poor diversification

The 3 months correlation between Kardemir and Cuhadaroglu is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kardemir Karabuk Demir 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 Kardemir Karabuk 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 Kardemir Karabuk Demir 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 Kardemir Karabuk i.e., Kardemir Karabuk and Cuhadaroglu Metal go up and down completely randomly.

Pair Corralation between Kardemir Karabuk and Cuhadaroglu Metal

Assuming the 90 days trading horizon Kardemir Karabuk Demir is expected to under-perform the Cuhadaroglu Metal. But the stock apears to be less risky and, when comparing its historical volatility, Kardemir Karabuk Demir is 1.46 times less risky than Cuhadaroglu Metal. The stock trades about -0.1 of its potential returns per unit of risk. The Cuhadaroglu Metal Sanayi is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  2,170  in Cuhadaroglu Metal Sanayi on October 10, 2024 and sell it today you would earn a total of  616.00  from holding Cuhadaroglu Metal Sanayi or generate 28.39% return on investment over 90 days.

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

Kardemir Karabuk Demir  vs.  Cuhadaroglu Metal Sanayi

Kardemir Karabuk Demir

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kardemir Karabuk may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cuhadaroglu Metal Sanayi

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cuhadaroglu Metal Sanayi are ranked lower than 18 (%) 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 Kardemir Karabuk and Cuhadaroglu Metal

The main advantage of trading using opposite Kardemir Karabuk and Cuhadaroglu Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kardemir Karabuk 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 Kardemir Karabuk Demir 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.