Correlation Between Penguen Gida and Galata Wind

Can any of the company-specific risk be diversified away by investing in both Penguen Gida and Galata Wind 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 Penguen Gida and Galata Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Penguen Gida Sanayi and Galata Wind Enerji, you can compare the effects of market volatilities on Penguen Gida and Galata Wind 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 Penguen Gida with a short position of Galata Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penguen Gida and Galata Wind.

Diversification Opportunities for Penguen Gida and Galata Wind

0.67

Correlation Coefficient

Penguen Gida  Galata Wind

Poor diversification

The 3 months correlation between Penguen and Galata is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Penguen Gida Sanayi and Galata Wind Enerji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galata Wind Enerji and Penguen Gida 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 Penguen Gida Sanayi are associated (or correlated) with Galata Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galata Wind Enerji has no effect on the direction of Penguen Gida i.e., Penguen Gida and Galata Wind go up and down completely randomly.

Pair Corralation between Penguen Gida and Galata Wind

Assuming the 90 days trading horizon Penguen Gida is expected to generate 2.15 times less return on investment than Galata Wind. But when comparing it to its historical volatility, Penguen Gida Sanayi is 1.4 times less risky than Galata Wind. It trades about 0.13 of its potential returns per unit of risk. Galata Wind Enerji is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,406  in Galata Wind Enerji on October 5, 2024 and sell it today you would earn a total of  806.00  from holding Galata Wind Enerji or generate 33.5% return on investment over 90 days.

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

Penguen Gida Sanayi  vs.  Galata Wind Enerji

Penguen Gida Sanayi

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penguen Gida Sanayi are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Penguen Gida demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Galata Wind Enerji

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Galata Wind Enerji are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Galata Wind demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penguen Gida and Galata Wind

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

The idea behind Penguen Gida Sanayi and Galata Wind Enerji 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.