Correlation Between MEGA METAL and Euro Trend

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

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

Diversification Opportunities for MEGA METAL and Euro Trend

0.23

Correlation Coefficient

MEGA METAL  Euro Trend

Modest diversification

The 3 months correlation between MEGA and Euro is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding MEGA METAL and Euro Trend Yatirim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Trend Yatirim 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 Euro Trend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Trend Yatirim has no effect on the direction of MEGA METAL i.e., MEGA METAL and Euro Trend go up and down completely randomly.

Pair Corralation between MEGA METAL and Euro Trend

Assuming the 90 days trading horizon MEGA METAL is expected to under-perform the Euro Trend. But the stock apears to be less risky and, when comparing its historical volatility, MEGA METAL is 1.76 times less risky than Euro Trend. The stock trades about -0.25 of its potential returns per unit of risk. The Euro Trend Yatirim is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,195  in Euro Trend Yatirim on October 20, 2024 and sell it today you would lose (65.00) from holding Euro Trend Yatirim or give up 5.44% 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.  Euro Trend Yatirim

MEGA METAL

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MEGA METAL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, MEGA METAL is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Euro Trend Yatirim

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euro Trend Yatirim has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Euro Trend 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 Euro Trend

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

The idea behind MEGA METAL and Euro Trend Yatirim 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.