Correlation Between IZDEMIR Enerji and Aselsan Elektronik

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Can any of the company-specific risk be diversified away by investing in both IZDEMIR Enerji 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 IZDEMIR Enerji and Aselsan Elektronik into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IZDEMIR Enerji Elektrik and Aselsan Elektronik Sanayi, you can compare the effects of market volatilities on IZDEMIR Enerji 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 IZDEMIR Enerji with a short position of Aselsan Elektronik. Check out your portfolio center. Please also check ongoing floating volatility patterns of IZDEMIR Enerji and Aselsan Elektronik.

Diversification Opportunities for IZDEMIR Enerji and Aselsan Elektronik

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between IZDEMIR and Aselsan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding IZDEMIR Enerji Elektrik 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 IZDEMIR Enerji 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 IZDEMIR Enerji Elektrik 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 IZDEMIR Enerji i.e., IZDEMIR Enerji and Aselsan Elektronik go up and down completely randomly.

Pair Corralation between IZDEMIR Enerji and Aselsan Elektronik

Assuming the 90 days trading horizon IZDEMIR Enerji Elektrik is expected to under-perform the Aselsan Elektronik. In addition to that, IZDEMIR Enerji is 1.25 times more volatile than Aselsan Elektronik Sanayi. It trades about -0.02 of its total potential returns per unit of risk. Aselsan Elektronik Sanayi is currently generating about 0.09 per unit of volatility. If you would invest  4,686  in Aselsan Elektronik Sanayi on October 5, 2024 and sell it today you would earn a total of  2,664  from holding Aselsan Elektronik Sanayi or generate 56.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

IZDEMIR Enerji Elektrik  vs.  Aselsan Elektronik Sanayi

 Performance 
       Timeline  
IZDEMIR Enerji Elektrik 

Risk-Adjusted Performance

9 of 100

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

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Aselsan Elektronik Sanayi are ranked lower than 16 (%) 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.

IZDEMIR Enerji and Aselsan Elektronik Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IZDEMIR Enerji and Aselsan Elektronik

The main advantage of trading using opposite IZDEMIR Enerji and Aselsan Elektronik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IZDEMIR Enerji 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 IZDEMIR Enerji Elektrik 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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