Correlation Between Nuh Cimento and Izmir Demir

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

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

Diversification Opportunities for Nuh Cimento and Izmir Demir

0.6

Correlation Coefficient

Nuh Cimento  Izmir Demir

Poor diversification

The 3 months correlation between Nuh and Izmir is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nuh Cimento Sanayi and Izmir Demir Celik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Izmir Demir Celik and Nuh Cimento 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 Nuh Cimento Sanayi are associated (or correlated) with Izmir Demir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Izmir Demir Celik has no effect on the direction of Nuh Cimento i.e., Nuh Cimento and Izmir Demir go up and down completely randomly.

Pair Corralation between Nuh Cimento and Izmir Demir

Assuming the 90 days trading horizon Nuh Cimento Sanayi is expected to generate 1.32 times more return on investment than Izmir Demir. However, Nuh Cimento is 1.32 times more volatile than Izmir Demir Celik. It trades about -0.05 of its potential returns per unit of risk. Izmir Demir Celik is currently generating about -0.09 per unit of risk. If you would invest  29,226  in Nuh Cimento Sanayi on December 27, 2024 and sell it today you would lose (2,726) from holding Nuh Cimento Sanayi or give up 9.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Nuh Cimento Sanayi  vs.  Izmir Demir Celik

Nuh Cimento Sanayi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuh Cimento Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Izmir Demir Celik

Risk-Adjusted Performance

Very Weak

Over the last 90 days Izmir Demir Celik has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Nuh Cimento and Izmir Demir

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

The idea behind Nuh Cimento Sanayi and Izmir Demir Celik 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.