Correlation Between Datagate Bilgisayar and Federal Mogul

Can any of the company-specific risk be diversified away by investing in both Datagate Bilgisayar 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 Datagate Bilgisayar and Federal Mogul into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Datagate Bilgisayar Malzemeleri and Federal Mogul Izmit, you can compare the effects of market volatilities on Datagate Bilgisayar 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 Datagate Bilgisayar with a short position of Federal Mogul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datagate Bilgisayar and Federal Mogul.

Diversification Opportunities for Datagate Bilgisayar and Federal Mogul

0.55

Correlation Coefficient

Datagate Bilgisayar  Federal Mogul

Very weak diversification

The 3 months correlation between Datagate and Federal is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Datagate Bilgisayar Malzemeler 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 Datagate Bilgisayar 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 Datagate Bilgisayar Malzemeleri 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 Datagate Bilgisayar i.e., Datagate Bilgisayar and Federal Mogul go up and down completely randomly.

Pair Corralation between Datagate Bilgisayar and Federal Mogul

Assuming the 90 days trading horizon Datagate Bilgisayar is expected to generate 1.06 times less return on investment than Federal Mogul. In addition to that, Datagate Bilgisayar is 1.48 times more volatile than Federal Mogul Izmit. It trades about 0.02 of its total potential returns per unit of risk. Federal Mogul Izmit is currently generating about 0.02 per unit of volatility. If you would invest  31,975  in Federal Mogul Izmit on October 11, 2024 and sell it today you would earn a total of  375.00  from holding Federal Mogul Izmit or generate 1.17% return on investment over 90 days.

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

Datagate Bilgisayar Malzemeler  vs.  Federal Mogul Izmit

Datagate Bilgisayar

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datagate Bilgisayar Malzemeleri are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Datagate Bilgisayar demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Federal Mogul Izmit

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Mogul Izmit are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Federal Mogul demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Datagate Bilgisayar and Federal Mogul

The main advantage of trading using opposite Datagate Bilgisayar and Federal Mogul positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datagate Bilgisayar 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 Datagate Bilgisayar Malzemeleri 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.