Correlation Between Penta Teknoloji and Cimsa Cimento

Can any of the company-specific risk be diversified away by investing in both Penta Teknoloji and Cimsa Cimento 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 Penta Teknoloji and Cimsa Cimento into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Penta Teknoloji Urunleri and Cimsa Cimento Sanayi, you can compare the effects of market volatilities on Penta Teknoloji and Cimsa Cimento 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 Penta Teknoloji with a short position of Cimsa Cimento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta Teknoloji and Cimsa Cimento.

Diversification Opportunities for Penta Teknoloji and Cimsa Cimento

0.85

Correlation Coefficient

Penta Teknoloji  Cimsa Cimento

Very poor diversification

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

Pair Corralation between Penta Teknoloji and Cimsa Cimento

Assuming the 90 days trading horizon Penta Teknoloji is expected to generate 1.5 times less return on investment than Cimsa Cimento. But when comparing it to its historical volatility, Penta Teknoloji Urunleri is 1.78 times less risky than Cimsa Cimento. It trades about 0.21 of its potential returns per unit of risk. Cimsa Cimento Sanayi is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,844  in Cimsa Cimento Sanayi on September 14, 2024 and sell it today you would earn a total of  418.00  from holding Cimsa Cimento Sanayi or generate 10.87% return on investment over 90 days.

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

Penta Teknoloji Urunleri  vs.  Cimsa Cimento Sanayi

Penta Teknoloji Urunleri

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Penta Teknoloji Urunleri are ranked lower than 2 (%) 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.

Cimsa Cimento Sanayi

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cimsa Cimento Sanayi are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Cimsa Cimento demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penta Teknoloji and Cimsa Cimento

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

The idea behind Penta Teknoloji Urunleri and Cimsa Cimento 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.