Correlation Between Kardemir Karabuk and SASA Polyester

Can any of the company-specific risk be diversified away by investing in both Kardemir Karabuk and SASA Polyester 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 Kardemir Karabuk and SASA Polyester into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kardemir Karabuk Demir and SASA Polyester Sanayi, you can compare the effects of market volatilities on Kardemir Karabuk and SASA Polyester 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 Kardemir Karabuk with a short position of SASA Polyester. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kardemir Karabuk and SASA Polyester.

Diversification Opportunities for Kardemir Karabuk and SASA Polyester

0.51

Correlation Coefficient

Kardemir Karabuk  SASA Polyester

Very weak diversification

The 3 months correlation between Kardemir and SASA is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kardemir Karabuk Demir and SASA Polyester Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SASA Polyester Sanayi and Kardemir Karabuk 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 Kardemir Karabuk Demir are associated (or correlated) with SASA Polyester. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SASA Polyester Sanayi has no effect on the direction of Kardemir Karabuk i.e., Kardemir Karabuk and SASA Polyester go up and down completely randomly.

Pair Corralation between Kardemir Karabuk and SASA Polyester

Assuming the 90 days trading horizon Kardemir Karabuk is expected to generate 12.58 times less return on investment than SASA Polyester. But when comparing it to its historical volatility, Kardemir Karabuk Demir is 14.07 times less risky than SASA Polyester. It trades about 0.05 of its potential returns per unit of risk. SASA Polyester Sanayi is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  496.00  in SASA Polyester Sanayi on September 26, 2024 and sell it today you would lose (92.00) from holding SASA Polyester Sanayi or give up 18.55% of portfolio value over 90 days.

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

Kardemir Karabuk Demir  vs.  SASA Polyester Sanayi

Kardemir Karabuk Demir

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kardemir Karabuk may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SASA Polyester Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SASA Polyester Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SASA Polyester is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kardemir Karabuk and SASA Polyester

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

The idea behind Kardemir Karabuk Demir and SASA Polyester 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.