Correlation Between Cemtas Celik and Federal Mogul

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Can any of the company-specific risk be diversified away by investing in both Cemtas Celik and Federal Mogul 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 Cemtas Celik and Federal Mogul into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cemtas Celik Makina and Federal Mogul Izmit, you can compare the effects of market volatilities on Cemtas Celik and Federal Mogul 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 Cemtas Celik with a short position of Federal Mogul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cemtas Celik and Federal Mogul.

Diversification Opportunities for Cemtas Celik and Federal Mogul

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Cemtas and Federal is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cemtas Celik Makina and Federal Mogul Izmit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Mogul Izmit and Cemtas Celik 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 Cemtas Celik Makina are associated (or correlated) with Federal Mogul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Mogul Izmit has no effect on the direction of Cemtas Celik i.e., Cemtas Celik and Federal Mogul go up and down completely randomly.

Pair Corralation between Cemtas Celik and Federal Mogul

Assuming the 90 days trading horizon Cemtas Celik Makina is expected to under-perform the Federal Mogul. But the stock apears to be less risky and, when comparing its historical volatility, Cemtas Celik Makina is 1.52 times less risky than Federal Mogul. The stock trades about -0.06 of its potential returns per unit of risk. The Federal Mogul Izmit is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  34,250  in Federal Mogul Izmit on September 23, 2024 and sell it today you would lose (1,750) from holding Federal Mogul Izmit or give up 5.11% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Cemtas Celik Makina  vs.  Federal Mogul Izmit

 Performance 
       Timeline  
Cemtas Celik Makina 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Cemtas Celik Makina has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Cemtas Celik is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
Federal Mogul Izmit 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Federal Mogul Izmit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Federal Mogul is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Cemtas Celik and Federal Mogul Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cemtas Celik and Federal Mogul

The main advantage of trading using opposite Cemtas Celik and Federal Mogul positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cemtas Celik position performs unexpectedly, Federal Mogul 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 Federal Mogul will offset losses from the drop in Federal Mogul's long position.
The idea behind Cemtas Celik Makina and Federal Mogul Izmit 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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