Correlation Between Nuh Cimento and Ozerden Plastik

Can any of the company-specific risk be diversified away by investing in both Nuh Cimento and Ozerden Plastik 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 Ozerden Plastik 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 Ozerden Plastik Sanayi, you can compare the effects of market volatilities on Nuh Cimento and Ozerden Plastik 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 Ozerden Plastik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuh Cimento and Ozerden Plastik.

Diversification Opportunities for Nuh Cimento and Ozerden Plastik

0.8

Correlation Coefficient

Nuh Cimento  Ozerden Plastik

Very poor diversification

The 3 months correlation between Nuh and Ozerden is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nuh Cimento Sanayi and Ozerden Plastik Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ozerden Plastik Sanayi 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 Ozerden Plastik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ozerden Plastik Sanayi has no effect on the direction of Nuh Cimento i.e., Nuh Cimento and Ozerden Plastik go up and down completely randomly.

Pair Corralation between Nuh Cimento and Ozerden Plastik

Assuming the 90 days trading horizon Nuh Cimento Sanayi is expected to generate 1.2 times more return on investment than Ozerden Plastik. However, Nuh Cimento is 1.2 times more volatile than Ozerden Plastik Sanayi. It trades about 0.07 of its potential returns per unit of risk. Ozerden Plastik Sanayi is currently generating about -0.2 per unit of risk. If you would invest  23,950  in Nuh Cimento Sanayi on October 2, 2024 and sell it today you would earn a total of  6,025  from holding Nuh Cimento Sanayi or generate 25.16% return on investment over 90 days.

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

Nuh Cimento Sanayi  vs.  Ozerden Plastik Sanayi

Nuh Cimento Sanayi

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuh Cimento Sanayi are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Nuh Cimento demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Ozerden Plastik Sanayi

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ozerden Plastik Sanayi are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Ozerden Plastik may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nuh Cimento and Ozerden Plastik

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

The idea behind Nuh Cimento Sanayi and Ozerden Plastik 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.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.