Correlation Between Cuhadaroglu Metal and Galata Wind

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

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

Diversification Opportunities for Cuhadaroglu Metal and Galata Wind

-0.24

Correlation Coefficient

Cuhadaroglu Metal  Galata Wind

Very good diversification

The 3 months correlation between Cuhadaroglu and Galata is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Cuhadaroglu Metal Sanayi and Galata Wind Enerji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galata Wind Enerji and Cuhadaroglu 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 Cuhadaroglu Metal Sanayi are associated (or correlated) with Galata Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galata Wind Enerji has no effect on the direction of Cuhadaroglu Metal i.e., Cuhadaroglu Metal and Galata Wind go up and down completely randomly.

Pair Corralation between Cuhadaroglu Metal and Galata Wind

Assuming the 90 days trading horizon Cuhadaroglu Metal Sanayi is expected to under-perform the Galata Wind. But the stock apears to be less risky and, when comparing its historical volatility, Cuhadaroglu Metal Sanayi is 1.09 times less risky than Galata Wind. The stock trades about -0.2 of its potential returns per unit of risk. The Galata Wind Enerji is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,970  in Galata Wind Enerji on April 4, 2024 and sell it today you would earn a total of  218.00  from holding Galata Wind Enerji or generate 7.34% return on investment over 90 days.

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

Cuhadaroglu Metal Sanayi  vs.  Galata Wind Enerji

Cuhadaroglu Metal Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Galata Wind Enerji

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Galata Wind Enerji are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, Galata Wind demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cuhadaroglu Metal and Galata Wind

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

The idea behind Cuhadaroglu Metal Sanayi and Galata Wind Enerji 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.