Correlation Between Vakif Menkul and Cuhadaroglu Metal

Can any of the company-specific risk be diversified away by investing in both Vakif Menkul and Cuhadaroglu Metal 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 Vakif Menkul and Cuhadaroglu Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vakif Menkul Kiymet and Cuhadaroglu Metal Sanayi, you can compare the effects of market volatilities on Vakif Menkul and Cuhadaroglu Metal 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 Vakif Menkul with a short position of Cuhadaroglu Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vakif Menkul and Cuhadaroglu Metal.

Diversification Opportunities for Vakif Menkul and Cuhadaroglu Metal

0.26

Correlation Coefficient

Vakif Menkul  Cuhadaroglu Metal

Modest diversification

The 3 months correlation between Vakif and Cuhadaroglu is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Vakif Menkul Kiymet and Cuhadaroglu Metal Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuhadaroglu Metal Sanayi and Vakif Menkul 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 Vakif Menkul Kiymet are associated (or correlated) with Cuhadaroglu Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuhadaroglu Metal Sanayi has no effect on the direction of Vakif Menkul i.e., Vakif Menkul and Cuhadaroglu Metal go up and down completely randomly.

Pair Corralation between Vakif Menkul and Cuhadaroglu Metal

Assuming the 90 days trading horizon Vakif Menkul is expected to generate 6.84 times less return on investment than Cuhadaroglu Metal. In addition to that, Vakif Menkul is 1.1 times more volatile than Cuhadaroglu Metal Sanayi. It trades about 0.03 of its total potential returns per unit of risk. Cuhadaroglu Metal Sanayi is currently generating about 0.25 per unit of volatility. If you would invest  1,961  in Cuhadaroglu Metal Sanayi on October 5, 2024 and sell it today you would earn a total of  879.00  from holding Cuhadaroglu Metal Sanayi or generate 44.82% return on investment over 90 days.

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

Vakif Menkul Kiymet  vs.  Cuhadaroglu Metal Sanayi

Vakif Menkul Kiymet

Risk-Adjusted Performance

2 of 100

Weak

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

Cuhadaroglu Metal Sanayi

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cuhadaroglu Metal Sanayi are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Cuhadaroglu Metal demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vakif Menkul and Cuhadaroglu Metal

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

The idea behind Vakif Menkul Kiymet and Cuhadaroglu Metal 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.