Correlation Between Sodas Sodyum and Afyon Cimento

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

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

Diversification Opportunities for Sodas Sodyum and Afyon Cimento

0.46

Correlation Coefficient

Sodas Sodyum  Afyon Cimento

Very weak diversification

The 3 months correlation between Sodas and Afyon is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sodas Sodyum Sanayi and Afyon Cimento Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afyon Cimento Sanayi and Sodas Sodyum 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 Sodas Sodyum Sanayi are associated (or correlated) with Afyon Cimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afyon Cimento Sanayi has no effect on the direction of Sodas Sodyum i.e., Sodas Sodyum and Afyon Cimento go up and down completely randomly.

Pair Corralation between Sodas Sodyum and Afyon Cimento

Assuming the 90 days trading horizon Sodas Sodyum Sanayi is expected to under-perform the Afyon Cimento. But the stock apears to be less risky and, when comparing its historical volatility, Sodas Sodyum Sanayi is 1.08 times less risky than Afyon Cimento. The stock trades about -0.04 of its potential returns per unit of risk. The Afyon Cimento Sanayi is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,385  in Afyon Cimento Sanayi on September 28, 2024 and sell it today you would earn a total of  94.00  from holding Afyon Cimento Sanayi or generate 6.79% return on investment over 90 days.

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

Sodas Sodyum Sanayi  vs.  Afyon Cimento Sanayi

Sodas Sodyum Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Afyon Cimento Sanayi

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Afyon Cimento Sanayi are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Afyon Cimento may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sodas Sodyum and Afyon Cimento

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

The idea behind Sodas Sodyum Sanayi and Afyon 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.