Correlation Between Baticim Bati and MEGA METAL

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

Diversification Opportunities for Baticim Bati and MEGA METAL

-0.27

Correlation Coefficient

Baticim Bati  MEGA METAL

Very good diversification

The 3 months correlation between Baticim and MEGA is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Baticim Bati Anadolu and MEGA METAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEGA METAL 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 MEGA METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEGA METAL has no effect on the direction of Baticim Bati i.e., Baticim Bati and MEGA METAL go up and down completely randomly.

Pair Corralation between Baticim Bati and MEGA METAL

Assuming the 90 days trading horizon Baticim Bati Anadolu is expected to generate 0.71 times more return on investment than MEGA METAL. However, Baticim Bati Anadolu is 1.41 times less risky than MEGA METAL. It trades about 0.05 of its potential returns per unit of risk. MEGA METAL is currently generating about -0.03 per unit of risk. If you would invest  13,990  in Baticim Bati Anadolu on October 12, 2024 and sell it today you would earn a total of  180.00  from holding Baticim Bati Anadolu or generate 1.29% 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.  MEGA METAL

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 fairly strong forward indicators, Baticim Bati is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

MEGA METAL

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MEGA METAL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, MEGA METAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Baticim Bati and MEGA METAL

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

The idea behind Baticim Bati Anadolu and MEGA METAL 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.