Correlation Between MEGA METAL and Afyon Cimento

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

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

Diversification Opportunities for MEGA METAL and Afyon Cimento

0.34

Correlation Coefficient

MEGA METAL  Afyon Cimento

Weak diversification

The 3 months correlation between MEGA and Afyon is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding MEGA METAL 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 MEGA METAL 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 MEGA METAL 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 MEGA METAL i.e., MEGA METAL and Afyon Cimento go up and down completely randomly.

Pair Corralation between MEGA METAL and Afyon Cimento

Assuming the 90 days trading horizon MEGA METAL is expected to generate 0.73 times more return on investment than Afyon Cimento. However, MEGA METAL is 1.38 times less risky than Afyon Cimento. It trades about -0.03 of its potential returns per unit of risk. Afyon Cimento Sanayi is currently generating about -0.02 per unit of risk. If you would invest  3,590  in MEGA METAL on September 15, 2024 and sell it today you would lose (198.00) from holding MEGA METAL or give up 5.52% of portfolio value over 90 days.

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

MEGA METAL  vs.  Afyon Cimento Sanayi

MEGA METAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEGA METAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, MEGA METAL is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Afyon Cimento Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afyon Cimento Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Afyon Cimento is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with MEGA METAL and Afyon Cimento

The main advantage of trading using opposite MEGA METAL and Afyon Cimento positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEGA METAL 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 MEGA METAL 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.