Correlation Between Politeknik Metal and Galata Wind

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

Diversification Opportunities for Politeknik Metal and Galata Wind

0.67

Correlation Coefficient

Politeknik Metal  Galata Wind

Poor diversification

The 3 months correlation between Politeknik and Galata is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Politeknik Metal Sanayi and Galata Wind Enerji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galata Wind Enerji 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 Galata Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galata Wind Enerji has no effect on the direction of Politeknik Metal i.e., Politeknik Metal and Galata Wind go up and down completely randomly.

Pair Corralation between Politeknik Metal and Galata Wind

Assuming the 90 days trading horizon Politeknik Metal is expected to generate 5.18 times less return on investment than Galata Wind. In addition to that, Politeknik Metal is 1.26 times more volatile than Galata Wind Enerji. It trades about 0.01 of its total potential returns per unit of risk. Galata Wind Enerji is currently generating about 0.09 per unit of volatility. If you would invest  2,688  in Galata Wind Enerji on September 17, 2024 and sell it today you would earn a total of  346.00  from holding Galata Wind Enerji or generate 12.87% return on investment over 90 days.

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

Politeknik Metal Sanayi  vs.  Galata Wind Enerji

Politeknik Metal Sanayi

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Politeknik Metal Sanayi are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Politeknik Metal is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Galata Wind Enerji

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Galata Wind Enerji are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Galata Wind demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Politeknik Metal and Galata Wind

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

The idea behind Politeknik Metal Sanayi and Galata Wind Enerji 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.