Correlation Between Politeknik Metal and Bayrak EBT

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

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

Diversification Opportunities for Politeknik Metal and Bayrak EBT

-0.08

Correlation Coefficient

Politeknik Metal  Bayrak EBT

Good diversification

The 3 months correlation between Politeknik and Bayrak is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Politeknik Metal Sanayi and Bayrak EBT Taban in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayrak EBT Taban and Politeknik Metal 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 Politeknik Metal Sanayi are associated (or correlated) with Bayrak EBT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayrak EBT Taban has no effect on the direction of Politeknik Metal i.e., Politeknik Metal and Bayrak EBT go up and down completely randomly.

Pair Corralation between Politeknik Metal and Bayrak EBT

Assuming the 90 days trading horizon Politeknik Metal Sanayi is expected to generate 0.82 times more return on investment than Bayrak EBT. However, Politeknik Metal Sanayi is 1.22 times less risky than Bayrak EBT. It trades about 0.09 of its potential returns per unit of risk. Bayrak EBT Taban is currently generating about 0.05 per unit of risk. If you would invest  171,996  in Politeknik Metal Sanayi on October 4, 2024 and sell it today you would earn a total of  528,504  from holding Politeknik Metal Sanayi or generate 307.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

Politeknik Metal Sanayi  vs.  Bayrak EBT Taban

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.

Bayrak EBT Taban

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bayrak EBT Taban has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Bayrak EBT is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Politeknik Metal and Bayrak EBT

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

The idea behind Politeknik Metal Sanayi and Bayrak EBT Taban 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.