Correlation Between MEGA METAL and Cimentas Izmir

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

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

Diversification Opportunities for MEGA METAL and Cimentas Izmir

0.47

Correlation Coefficient

MEGA METAL  Cimentas Izmir

Very weak diversification

The 3 months correlation between MEGA and Cimentas is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding MEGA METAL and Cimentas Izmir Cimento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cimentas Izmir Cimento 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 Cimentas Izmir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cimentas Izmir Cimento has no effect on the direction of MEGA METAL i.e., MEGA METAL and Cimentas Izmir go up and down completely randomly.

Pair Corralation between MEGA METAL and Cimentas Izmir

Assuming the 90 days trading horizon MEGA METAL is expected to generate 4.79 times less return on investment than Cimentas Izmir. But when comparing it to its historical volatility, MEGA METAL is 1.11 times less risky than Cimentas Izmir. It trades about 0.02 of its potential returns per unit of risk. Cimentas Izmir Cimento is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6,880  in Cimentas Izmir Cimento on September 25, 2024 and sell it today you would earn a total of  38,395  from holding Cimentas Izmir Cimento or generate 558.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	51.52%
Values	Daily Returns

MEGA METAL  vs.  Cimentas Izmir Cimento

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.

Cimentas Izmir Cimento

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cimentas Izmir Cimento are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Cimentas Izmir demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MEGA METAL and Cimentas Izmir

The main advantage of trading using opposite MEGA METAL and Cimentas Izmir positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEGA METAL position performs unexpectedly, Cimentas Izmir 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 Cimentas Izmir will offset losses from the drop in Cimentas Izmir's long position.

The idea behind MEGA METAL and Cimentas Izmir Cimento 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.