Correlation Between Cimentas Izmir and Nuh Cimento

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

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

Diversification Opportunities for Cimentas Izmir and Nuh Cimento

0.77

Correlation Coefficient

Cimentas Izmir  Nuh Cimento

Poor diversification

The 3 months correlation between Cimentas and Nuh is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cimentas Izmir Cimento and Nuh Cimento Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuh Cimento Sanayi and Cimentas Izmir 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 Cimentas Izmir Cimento are associated (or correlated) with Nuh Cimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuh Cimento Sanayi has no effect on the direction of Cimentas Izmir i.e., Cimentas Izmir and Nuh Cimento go up and down completely randomly.

Pair Corralation between Cimentas Izmir and Nuh Cimento

Assuming the 90 days trading horizon Cimentas Izmir Cimento is expected to generate 1.37 times more return on investment than Nuh Cimento. However, Cimentas Izmir is 1.37 times more volatile than Nuh Cimento Sanayi. It trades about 0.01 of its potential returns per unit of risk. Nuh Cimento Sanayi is currently generating about 0.01 per unit of risk. If you would invest  49,000  in Cimentas Izmir Cimento on September 24, 2024 and sell it today you would lose (2,475) from holding Cimentas Izmir Cimento or give up 5.05% of portfolio value over 90 days.

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

Cimentas Izmir Cimento  vs.  Nuh Cimento Sanayi

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.

Nuh Cimento Sanayi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuh Cimento Sanayi are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Nuh Cimento may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cimentas Izmir and Nuh Cimento

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

The idea behind Cimentas Izmir Cimento and Nuh Cimento 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 Anywhere module to track or share privately all of your investments from the convenience of any device.