Correlation Between MEGA METAL and KOC METALURJI

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

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

Diversification Opportunities for MEGA METAL and KOC METALURJI

0.44

Correlation Coefficient

MEGA METAL  KOC METALURJI

Very weak diversification

The 3 months correlation between MEGA and KOC is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding MEGA METAL and KOC METALURJI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOC METALURJI 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 KOC METALURJI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOC METALURJI has no effect on the direction of MEGA METAL i.e., MEGA METAL and KOC METALURJI go up and down completely randomly.

Pair Corralation between MEGA METAL and KOC METALURJI

Assuming the 90 days trading horizon MEGA METAL is expected to generate 0.71 times more return on investment than KOC METALURJI. However, MEGA METAL is 1.4 times less risky than KOC METALURJI. It trades about 0.03 of its potential returns per unit of risk. KOC METALURJI is currently generating about 0.01 per unit of risk. If you would invest  2,924  in MEGA METAL on October 23, 2024 and sell it today you would earn a total of  68.00  from holding MEGA METAL or generate 2.33% return on investment over 90 days.

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

MEGA METAL  vs.  KOC METALURJI

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.

KOC METALURJI

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind MEGA METAL and KOC METALURJI 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.