Correlation Between Galatasaray Sportif and Federal Mogul

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

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

Diversification Opportunities for Galatasaray Sportif and Federal Mogul

-0.22

Correlation Coefficient

Galatasaray Sportif  Federal Mogul

Very good diversification

The 3 months correlation between Galatasaray and Federal is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Galatasaray Sportif Sinai 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 Galatasaray Sportif 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 Galatasaray Sportif Sinai 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 Galatasaray Sportif i.e., Galatasaray Sportif and Federal Mogul go up and down completely randomly.

Pair Corralation between Galatasaray Sportif and Federal Mogul

Assuming the 90 days trading horizon Galatasaray Sportif is expected to generate 10.23 times less return on investment than Federal Mogul. But when comparing it to its historical volatility, Galatasaray Sportif Sinai is 1.16 times less risky than Federal Mogul. It trades about 0.01 of its potential returns per unit of risk. Federal Mogul Izmit is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  27,425  in Federal Mogul Izmit on October 11, 2024 and sell it today you would earn a total of  4,925  from holding Federal Mogul Izmit or generate 17.96% return on investment over 90 days.

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

Galatasaray Sportif Sinai  vs.  Federal Mogul Izmit

Galatasaray Sportif Sinai

Risk-Adjusted Performance

1 of 100

Weak

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

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 Galatasaray Sportif and Federal Mogul

The main advantage of trading using opposite Galatasaray Sportif and Federal Mogul positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galatasaray Sportif 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 Galatasaray Sportif Sinai 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.