Correlation Between Eregli Demir and Enerjisa Enerji

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

Diversification Opportunities for Eregli Demir and Enerjisa Enerji

0.8

Correlation Coefficient

Eregli Demir  Enerjisa Enerji

Very poor diversification

The 3 months correlation between Eregli and Enerjisa is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eregli Demir ve and Enerjisa Enerji AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerjisa Enerji AS 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 Enerjisa Enerji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerjisa Enerji AS has no effect on the direction of Eregli Demir i.e., Eregli Demir and Enerjisa Enerji go up and down completely randomly.

Pair Corralation between Eregli Demir and Enerjisa Enerji

Assuming the 90 days trading horizon Eregli Demir ve is expected to generate 1.22 times more return on investment than Enerjisa Enerji. However, Eregli Demir is 1.22 times more volatile than Enerjisa Enerji AS. It trades about -0.02 of its potential returns per unit of risk. Enerjisa Enerji AS is currently generating about -0.05 per unit of risk. If you would invest  2,535  in Eregli Demir ve on September 24, 2024 and sell it today you would lose (25.00) from holding Eregli Demir ve or give up 0.99% of portfolio value over 90 days.

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

Eregli Demir ve  vs.  Enerjisa Enerji AS

Eregli Demir ve

Risk-Adjusted Performance

0 of 100

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.

Enerjisa Enerji AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enerjisa Enerji AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Enerjisa Enerji 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 Enerjisa Enerji

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

The idea behind Eregli Demir ve and Enerjisa Enerji AS 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.