Correlation Between Politeknik Metal and Bursa Cimento

Can any of the company-specific risk be diversified away by investing in both Politeknik Metal and Bursa 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 Politeknik Metal and Bursa Cimento 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 Bursa Cimento Fabrikasi, you can compare the effects of market volatilities on Politeknik Metal and Bursa 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 Politeknik Metal with a short position of Bursa Cimento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Politeknik Metal and Bursa Cimento.

Diversification Opportunities for Politeknik Metal and Bursa Cimento

0.76

Correlation Coefficient

Politeknik Metal  Bursa Cimento

Poor diversification

The 3 months correlation between Politeknik and Bursa is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Politeknik Metal Sanayi and Bursa Cimento Fabrikasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bursa Cimento Fabrikasi 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 Bursa Cimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bursa Cimento Fabrikasi has no effect on the direction of Politeknik Metal i.e., Politeknik Metal and Bursa Cimento go up and down completely randomly.

Pair Corralation between Politeknik Metal and Bursa Cimento

Assuming the 90 days trading horizon Politeknik Metal Sanayi is expected to under-perform the Bursa Cimento. In addition to that, Politeknik Metal is 1.13 times more volatile than Bursa Cimento Fabrikasi. It trades about -0.06 of its total potential returns per unit of risk. Bursa Cimento Fabrikasi is currently generating about 0.17 per unit of volatility. If you would invest  742.00  in Bursa Cimento Fabrikasi on September 25, 2024 and sell it today you would earn a total of  76.00  from holding Bursa Cimento Fabrikasi or generate 10.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Politeknik Metal Sanayi  vs.  Bursa Cimento Fabrikasi

Politeknik Metal Sanayi

Risk-Adjusted Performance

0 of 100

Weak

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

Bursa Cimento Fabrikasi

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Politeknik Metal and Bursa Cimento

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

The idea behind Politeknik Metal Sanayi and Bursa Cimento Fabrikasi 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.