Correlation Between IZDEMIR Enerji and Sodas Sodyum

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

Diversification Opportunities for IZDEMIR Enerji and Sodas Sodyum

0.22

Correlation Coefficient

IZDEMIR Enerji  Sodas Sodyum

Modest diversification

The 3 months correlation between IZDEMIR and Sodas is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding IZDEMIR Enerji Elektrik and Sodas Sodyum Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sodas Sodyum 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 Sodas Sodyum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sodas Sodyum Sanayi has no effect on the direction of IZDEMIR Enerji i.e., IZDEMIR Enerji and Sodas Sodyum go up and down completely randomly.

Pair Corralation between IZDEMIR Enerji and Sodas Sodyum

Assuming the 90 days trading horizon IZDEMIR Enerji is expected to generate 5.69 times less return on investment than Sodas Sodyum. But when comparing it to its historical volatility, IZDEMIR Enerji Elektrik is 1.23 times less risky than Sodas Sodyum. It trades about 0.02 of its potential returns per unit of risk. Sodas Sodyum Sanayi is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,644  in Sodas Sodyum Sanayi on October 5, 2024 and sell it today you would earn a total of  7,956  from holding Sodas Sodyum Sanayi or generate 300.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.42%
Values	Daily Returns

IZDEMIR Enerji Elektrik  vs.  Sodas Sodyum Sanayi

IZDEMIR Enerji Elektrik

Risk-Adjusted Performance

9 of 100

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.

Sodas Sodyum Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sodas Sodyum Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Sodas Sodyum 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 Sodas Sodyum

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

The idea behind IZDEMIR Enerji Elektrik and Sodas Sodyum 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 Transaction History module to view history of all your transactions and understand their impact on performance.