Correlation Between Eregli Demir and Gentas Genel

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

Diversification Opportunities for Eregli Demir and Gentas Genel

0.65

Correlation Coefficient

Eregli Demir  Gentas Genel

Poor diversification

The 3 months correlation between Eregli and Gentas is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Eregli Demir ve and Gentas Genel Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentas Genel Metal 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 Gentas Genel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentas Genel Metal has no effect on the direction of Eregli Demir i.e., Eregli Demir and Gentas Genel go up and down completely randomly.

Pair Corralation between Eregli Demir and Gentas Genel

Assuming the 90 days trading horizon Eregli Demir is expected to generate 1.15 times less return on investment than Gentas Genel. In addition to that, Eregli Demir is 1.54 times more volatile than Gentas Genel Metal. It trades about 0.03 of its total potential returns per unit of risk. Gentas Genel Metal is currently generating about 0.05 per unit of volatility. If you would invest  521.00  in Gentas Genel Metal on September 24, 2024 and sell it today you would earn a total of  422.00  from holding Gentas Genel Metal or generate 81.0% return on investment over 90 days.

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

Eregli Demir ve  vs.  Gentas Genel Metal

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.

Gentas Genel Metal

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gentas Genel Metal are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Gentas Genel demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eregli Demir and Gentas Genel

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

The idea behind Eregli Demir ve and Gentas Genel Metal 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.