Correlation Between Politeknik Metal and Celik Halat

Can any of the company-specific risk be diversified away by investing in both Politeknik Metal and Celik Halat 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 Celik Halat 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 Celik Halat ve, you can compare the effects of market volatilities on Politeknik Metal and Celik Halat 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 Celik Halat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Politeknik Metal and Celik Halat.

Diversification Opportunities for Politeknik Metal and Celik Halat

0.83

Correlation Coefficient

Politeknik Metal  Celik Halat

Very poor diversification

The 3 months correlation between Politeknik and Celik is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Politeknik Metal Sanayi and Celik Halat ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celik Halat ve 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 Celik Halat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celik Halat ve has no effect on the direction of Politeknik Metal i.e., Politeknik Metal and Celik Halat go up and down completely randomly.

Pair Corralation between Politeknik Metal and Celik Halat

Assuming the 90 days trading horizon Politeknik Metal Sanayi is expected to under-perform the Celik Halat. But the stock apears to be less risky and, when comparing its historical volatility, Politeknik Metal Sanayi is 1.14 times less risky than Celik Halat. The stock trades about -0.03 of its potential returns per unit of risk. The Celik Halat ve is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,200  in Celik Halat ve on December 26, 2024 and sell it today you would lose (158.00) from holding Celik Halat ve or give up 7.18% of portfolio value over 90 days.

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

Politeknik Metal Sanayi  vs.  Celik Halat ve

Politeknik Metal Sanayi

Risk-Adjusted Performance

Very 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.

Celik Halat ve

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Politeknik Metal and Celik Halat

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

The idea behind Politeknik Metal Sanayi and Celik Halat ve 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.