Correlation Between Ozerden Plastik and Politeknik Metal

Can any of the company-specific risk be diversified away by investing in both Ozerden Plastik and Politeknik Metal 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 Ozerden Plastik and Politeknik Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ozerden Plastik Sanayi and Politeknik Metal Sanayi, you can compare the effects of market volatilities on Ozerden Plastik and Politeknik Metal 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 Ozerden Plastik with a short position of Politeknik Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ozerden Plastik and Politeknik Metal.

Diversification Opportunities for Ozerden Plastik and Politeknik Metal

0.85

Correlation Coefficient

Ozerden Plastik  Politeknik Metal

Very poor diversification

The 3 months correlation between Ozerden and Politeknik is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ozerden Plastik Sanayi and Politeknik Metal Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Politeknik Metal Sanayi and Ozerden Plastik 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 Ozerden Plastik Sanayi are associated (or correlated) with Politeknik Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Politeknik Metal Sanayi has no effect on the direction of Ozerden Plastik i.e., Ozerden Plastik and Politeknik Metal go up and down completely randomly.

Pair Corralation between Ozerden Plastik and Politeknik Metal

Assuming the 90 days trading horizon Ozerden Plastik Sanayi is expected to under-perform the Politeknik Metal. But the stock apears to be less risky and, when comparing its historical volatility, Ozerden Plastik Sanayi is 1.23 times less risky than Politeknik Metal. The stock trades about -0.17 of its potential returns per unit of risk. The Politeknik Metal Sanayi is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  905,250  in Politeknik Metal Sanayi on October 4, 2024 and sell it today you would lose (204,750) from holding Politeknik Metal Sanayi or give up 22.62% of portfolio value over 90 days.

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

Ozerden Plastik Sanayi  vs.  Politeknik Metal Sanayi

Ozerden Plastik Sanayi

Risk-Adjusted Performance

5 of 100

Modest

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

Politeknik Metal Sanayi

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Politeknik Metal Sanayi are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Politeknik Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ozerden Plastik and Politeknik Metal

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

The idea behind Ozerden Plastik Sanayi and Politeknik Metal 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.