Correlation Between Eregli Demir and Aselsan Elektronik

Can any of the company-specific risk be diversified away by investing in both Eregli Demir and Aselsan Elektronik 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 Eregli Demir and Aselsan Elektronik into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eregli Demir ve and Aselsan Elektronik Sanayi, you can compare the effects of market volatilities on Eregli Demir and Aselsan Elektronik 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 Eregli Demir with a short position of Aselsan Elektronik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eregli Demir and Aselsan Elektronik.

Diversification Opportunities for Eregli Demir and Aselsan Elektronik

0.4

Correlation Coefficient

Eregli Demir  Aselsan Elektronik

Very weak diversification

The 3 months correlation between Eregli and Aselsan is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eregli Demir ve and Aselsan Elektronik Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aselsan Elektronik Sanayi and Eregli Demir 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 Eregli Demir ve are associated (or correlated) with Aselsan Elektronik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aselsan Elektronik Sanayi has no effect on the direction of Eregli Demir i.e., Eregli Demir and Aselsan Elektronik go up and down completely randomly.

Pair Corralation between Eregli Demir and Aselsan Elektronik

Assuming the 90 days trading horizon Eregli Demir is expected to generate 14.27 times less return on investment than Aselsan Elektronik. But when comparing it to its historical volatility, Eregli Demir ve is 1.3 times less risky than Aselsan Elektronik. It trades about 0.01 of its potential returns per unit of risk. Aselsan Elektronik Sanayi is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5,915  in Aselsan Elektronik Sanayi on August 30, 2024 and sell it today you would earn a total of  925.00  from holding Aselsan Elektronik Sanayi or generate 15.64% return on investment over 90 days.

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

Eregli Demir ve  vs.  Aselsan Elektronik Sanayi

Eregli Demir ve

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aselsan Elektronik Sanayi

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Eregli Demir and Aselsan Elektronik

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

The idea behind Eregli Demir ve and Aselsan Elektronik 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.