Correlation Between Politeknik Metal and Desa Deri

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

Diversification Opportunities for Politeknik Metal and Desa Deri

0.68

Correlation Coefficient

Politeknik Metal  Desa Deri

Poor diversification

The 3 months correlation between Politeknik and Desa is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Politeknik Metal Sanayi and Desa Deri Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desa Deri Sanayi 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 Desa Deri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desa Deri Sanayi has no effect on the direction of Politeknik Metal i.e., Politeknik Metal and Desa Deri go up and down completely randomly.

Pair Corralation between Politeknik Metal and Desa Deri

Assuming the 90 days trading horizon Politeknik Metal Sanayi is expected to under-perform the Desa Deri. In addition to that, Politeknik Metal is 1.14 times more volatile than Desa Deri Sanayi. It trades about -0.11 of its total potential returns per unit of risk. Desa Deri Sanayi is currently generating about -0.03 per unit of volatility. If you would invest  2,198  in Desa Deri Sanayi on October 9, 2024 and sell it today you would lose (30.00) from holding Desa Deri Sanayi or give up 1.36% of portfolio value over 90 days.

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

Politeknik Metal Sanayi  vs.  Desa Deri Sanayi

Politeknik Metal Sanayi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Politeknik Metal Sanayi are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Politeknik Metal demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Desa Deri Sanayi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Desa Deri Sanayi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Desa Deri is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Politeknik Metal and Desa Deri

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

The idea behind Politeknik Metal Sanayi and Desa Deri 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.