Correlation Between IZDEMIR Enerji and Penta Teknoloji

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

Diversification Opportunities for IZDEMIR Enerji and Penta Teknoloji

0.63

Correlation Coefficient

IZDEMIR Enerji  Penta Teknoloji

Poor diversification

The 3 months correlation between IZDEMIR and Penta is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding IZDEMIR Enerji Elektrik and Penta Teknoloji Urunleri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta Teknoloji Urunleri 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 Penta Teknoloji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penta Teknoloji Urunleri has no effect on the direction of IZDEMIR Enerji i.e., IZDEMIR Enerji and Penta Teknoloji go up and down completely randomly.

Pair Corralation between IZDEMIR Enerji and Penta Teknoloji

Assuming the 90 days trading horizon IZDEMIR Enerji Elektrik is expected to generate 1.61 times more return on investment than Penta Teknoloji. However, IZDEMIR Enerji is 1.61 times more volatile than Penta Teknoloji Urunleri. It trades about 0.05 of its potential returns per unit of risk. Penta Teknoloji Urunleri is currently generating about 0.05 per unit of risk. If you would invest  459.00  in IZDEMIR Enerji Elektrik on September 15, 2024 and sell it today you would earn a total of  36.00  from holding IZDEMIR Enerji Elektrik or generate 7.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

IZDEMIR Enerji Elektrik  vs.  Penta Teknoloji Urunleri

IZDEMIR Enerji Elektrik

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IZDEMIR Enerji Elektrik are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, IZDEMIR Enerji may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Penta Teknoloji Urunleri

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penta Teknoloji Urunleri are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Penta Teknoloji is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IZDEMIR Enerji and Penta Teknoloji

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

The idea behind IZDEMIR Enerji Elektrik and Penta Teknoloji Urunleri 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.