Correlation Between Politeknik Metal and Euro Trend

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

Diversification Opportunities for Politeknik Metal and Euro Trend

0.34

Correlation Coefficient

Politeknik Metal  Euro Trend

Weak diversification

The 3 months correlation between Politeknik and Euro is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Politeknik Metal Sanayi and Euro Trend Yatirim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Trend Yatirim 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 Euro Trend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Trend Yatirim has no effect on the direction of Politeknik Metal i.e., Politeknik Metal and Euro Trend go up and down completely randomly.

Pair Corralation between Politeknik Metal and Euro Trend

Assuming the 90 days trading horizon Politeknik Metal Sanayi is expected to generate 1.35 times more return on investment than Euro Trend. However, Politeknik Metal is 1.35 times more volatile than Euro Trend Yatirim. It trades about 0.01 of its potential returns per unit of risk. Euro Trend Yatirim is currently generating about -0.11 per unit of risk. If you would invest  683,000  in Politeknik Metal Sanayi on October 20, 2024 and sell it today you would lose (250.00) from holding Politeknik Metal Sanayi or give up 0.04% of portfolio value over 90 days.

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

Politeknik Metal Sanayi  vs.  Euro Trend Yatirim

Politeknik Metal Sanayi

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Politeknik Metal Sanayi are ranked lower than 6 (%) 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.

Euro Trend Yatirim

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euro Trend Yatirim has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Euro Trend 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 Euro Trend

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

The idea behind Politeknik Metal Sanayi and Euro Trend Yatirim 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.