Correlation Between Cuhadaroglu Metal and Zorlu Enerji

Can any of the company-specific risk be diversified away by investing in both Cuhadaroglu Metal and Zorlu Enerji 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 Zorlu Enerji 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 Zorlu Enerji Elektrik, you can compare the effects of market volatilities on Cuhadaroglu Metal and Zorlu Enerji 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 Zorlu Enerji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cuhadaroglu Metal and Zorlu Enerji.

Diversification Opportunities for Cuhadaroglu Metal and Zorlu Enerji

0.88

Correlation Coefficient

Cuhadaroglu Metal  Zorlu Enerji

Very poor diversification

The 3 months correlation between Cuhadaroglu and Zorlu is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cuhadaroglu Metal Sanayi and Zorlu Enerji Elektrik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zorlu Enerji Elektrik 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 Zorlu Enerji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zorlu Enerji Elektrik has no effect on the direction of Cuhadaroglu Metal i.e., Cuhadaroglu Metal and Zorlu Enerji go up and down completely randomly.

Pair Corralation between Cuhadaroglu Metal and Zorlu Enerji

Assuming the 90 days trading horizon Cuhadaroglu Metal is expected to generate 1.42 times less return on investment than Zorlu Enerji. But when comparing it to its historical volatility, Cuhadaroglu Metal Sanayi is 1.24 times less risky than Zorlu Enerji. It trades about 0.04 of its potential returns per unit of risk. Zorlu Enerji Elektrik is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  232.00  in Zorlu Enerji Elektrik on June 18, 2024 and sell it today you would earn a total of  201.00  from holding Zorlu Enerji Elektrik or generate 86.64% return on investment over 90 days.

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

Cuhadaroglu Metal Sanayi  vs.  Zorlu Enerji Elektrik

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 forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Zorlu Enerji Elektrik

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zorlu Enerji Elektrik has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in October 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Cuhadaroglu Metal and Zorlu Enerji

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

The idea behind Cuhadaroglu Metal Sanayi and Zorlu Enerji Elektrik 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.