Correlation Between Desa Deri and Derimod Konfeksiyon

Can any of the company-specific risk be diversified away by investing in both Desa Deri and Derimod Konfeksiyon 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 Desa Deri and Derimod Konfeksiyon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Desa Deri Sanayi and Derimod Konfeksiyon Ayakkabi, you can compare the effects of market volatilities on Desa Deri and Derimod Konfeksiyon 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 Desa Deri with a short position of Derimod Konfeksiyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desa Deri and Derimod Konfeksiyon.

Diversification Opportunities for Desa Deri and Derimod Konfeksiyon

0.58

Correlation Coefficient

Desa Deri  Derimod Konfeksiyon

Very weak diversification

The 3 months correlation between Desa and Derimod is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Desa Deri Sanayi and Derimod Konfeksiyon Ayakkabi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derimod Konfeksiyon and Desa Deri 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 Desa Deri Sanayi are associated (or correlated) with Derimod Konfeksiyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derimod Konfeksiyon has no effect on the direction of Desa Deri i.e., Desa Deri and Derimod Konfeksiyon go up and down completely randomly.

Pair Corralation between Desa Deri and Derimod Konfeksiyon

Assuming the 90 days trading horizon Desa Deri Sanayi is expected to under-perform the Derimod Konfeksiyon. But the stock apears to be less risky and, when comparing its historical volatility, Desa Deri Sanayi is 1.25 times less risky than Derimod Konfeksiyon. The stock trades about -0.1 of its potential returns per unit of risk. The Derimod Konfeksiyon Ayakkabi is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  4,284  in Derimod Konfeksiyon Ayakkabi on September 23, 2024 and sell it today you would lose (930.00) from holding Derimod Konfeksiyon Ayakkabi or give up 21.71% of portfolio value over 90 days.

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

Desa Deri Sanayi  vs.  Derimod Konfeksiyon Ayakkabi

Desa Deri Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Desa Deri Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Desa Deri is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Derimod Konfeksiyon

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Desa Deri and Derimod Konfeksiyon

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

The idea behind Desa Deri Sanayi and Derimod Konfeksiyon Ayakkabi 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..