Correlation Between Eregli Demir and Derimod Konfeksiyon

Can any of the company-specific risk be diversified away by investing in both Eregli Demir 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 Eregli Demir and Derimod Konfeksiyon 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 Derimod Konfeksiyon Ayakkabi, you can compare the effects of market volatilities on Eregli Demir 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 Eregli Demir with a short position of Derimod Konfeksiyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eregli Demir and Derimod Konfeksiyon.

Diversification Opportunities for Eregli Demir and Derimod Konfeksiyon

0.53

Correlation Coefficient

Eregli Demir  Derimod Konfeksiyon

Very weak diversification

The 3 months correlation between Eregli and Derimod is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Eregli Demir ve and Derimod Konfeksiyon Ayakkabi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derimod Konfeksiyon 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 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 Eregli Demir i.e., Eregli Demir and Derimod Konfeksiyon go up and down completely randomly.

Pair Corralation between Eregli Demir and Derimod Konfeksiyon

Assuming the 90 days trading horizon Eregli Demir is expected to generate 13.16 times less return on investment than Derimod Konfeksiyon. But when comparing it to its historical volatility, Eregli Demir ve is 2.26 times less risky than Derimod Konfeksiyon. It trades about 0.01 of its potential returns per unit of risk. Derimod Konfeksiyon Ayakkabi is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,196  in Derimod Konfeksiyon Ayakkabi on September 23, 2024 and sell it today you would earn a total of  158.00  from holding Derimod Konfeksiyon Ayakkabi or generate 4.94% 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.  Derimod Konfeksiyon Ayakkabi

Eregli Demir ve

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eregli Demir ve are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Eregli Demir is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

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 Eregli Demir and Derimod Konfeksiyon

The main advantage of trading using opposite Eregli Demir and Derimod Konfeksiyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eregli Demir 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 Eregli Demir ve 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.