Correlation Between Baticim Bati and Cimentas Izmir

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

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

Diversification Opportunities for Baticim Bati and Cimentas Izmir

-0.28

Correlation Coefficient

Baticim Bati  Cimentas Izmir

Very good diversification

The 3 months correlation between Baticim and Cimentas is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Baticim Bati Anadolu and Cimentas Izmir Cimento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cimentas Izmir Cimento and Baticim Bati 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 Baticim Bati Anadolu are associated (or correlated) with Cimentas Izmir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cimentas Izmir Cimento has no effect on the direction of Baticim Bati i.e., Baticim Bati and Cimentas Izmir go up and down completely randomly.

Pair Corralation between Baticim Bati and Cimentas Izmir

Assuming the 90 days trading horizon Baticim Bati Anadolu is expected to under-perform the Cimentas Izmir. But the stock apears to be less risky and, when comparing its historical volatility, Baticim Bati Anadolu is 1.33 times less risky than Cimentas Izmir. The stock trades about -0.14 of its potential returns per unit of risk. The Cimentas Izmir Cimento is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  40,675  in Cimentas Izmir Cimento on September 24, 2024 and sell it today you would earn a total of  5,850  from holding Cimentas Izmir Cimento or generate 14.38% return on investment over 90 days.

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

Baticim Bati Anadolu  vs.  Cimentas Izmir Cimento

Baticim Bati Anadolu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baticim Bati Anadolu 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 January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Cimentas Izmir Cimento

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cimentas Izmir Cimento are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Cimentas Izmir demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baticim Bati and Cimentas Izmir

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

The idea behind Baticim Bati Anadolu and Cimentas Izmir Cimento 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.